
Glass JASn-Zi. 
Book JBjSJS- 



COPYRIGHT DEPOSm 



Science of Value. Number 6 



DISTRIBUTION 



By 

HENRY RAWIE 

Autkor of 
Principles of A New Political Economy," Etc. 



Copyright secured 1907 by Henry Rawie. 



\ 



^^^^5^ 



I LIBRARY of CONiMJESS 
Two Copies Receive*.' 

DEC 30 1907 

Copyrigni tritr> 

GLASS /5? XXc, No. 
f COPY B. 



Modern Slavery. 



CHAPTER I. 

WHEN WE come to consider business as an af- 
fair of the centuries and as a process of evolu- 
tion, we change our views concerning the in- 
dividual power of our men of affairs. Instead of a 
great man creating a great business, we will find that 
the business created our great men. Men who are en- 
gaged in the commercial or industrial world do not 
create that world, and are not the arbiters of its destinies. 
The world moves forward resistless in the path of busi- 
ness as it moves resistless in its orbit around the sun. 
However high a great business may elevate a man, he 
has no power to assist or prevent his own success. 

It is true that there is a natural process of selec- 
tion in the commercial world, as well as there has been 
in the physical world, and many men court business and 
pursue commerce who fail. But this only illustrates a 
great truth, that instead of a man selecting a business 
and succeeding therein, the contrary is true, and business 
selects the man who will fill its requirements, and re- 
wards him for such service. 

The vast sums however, which accumulate to make 
great individual fortunes, must not be regarded as the 
reward Nature bestows upon the men whom she selects 
to carry on a successful business. As the whole world 
moves resistlessly forward, men are moved with it, and 
they share in all its faults, as well as in the successes. 



4 DISTRIBUTION. 

For this reason, among many other reasons, the single 
individual is utterly powerless to change the tide of 
great events, except as he may discover new truth. 

It is a very common opinion among men that if 
given all the money they desire, they could change the 
world to make it fit a pattern and theory of their own 
selection, but, because our world is governed by natural 
laws, which provide for centuries in advance of us, we 
may influence events, only as we discover natural laws, 
and as we discover the purpose of our world. We can- 
not interfere as individuals with the tide of events; a 
man cannot, for example, accumulate hundreds of mil- 
lions of dollars in business and then select some avenue 
of spending this money, and change the world according 
to his idea. A revolution seeking to provide an entirely 
new form for society fails as absolutely. No king in 
history could conquer the world, however great his treas- 
ure and his army. So, also, no money king may mold 
society to a new form. 

But although we are thus hemmed in by natural 
laws fixing boundaries to our affairs, we must not con- 
clude that Nature's Law is a law of fatalism in the 
affairs of man. We must not conclude that because 
evolution during millions of years has developed our 
marvelous world of continents and oceans, rivers and 
lakes, that evolution does not require something of us 
who occupy the summit of development. 

When man appeared on the earth, a change occur- 
red, and he has been given power to interfere with the 
orderly process of nature. Man cannot, therefore, fall 
back upon the fatalist doctrine, and say he need do 
nothing to assist in the social world, because all things 
will come out all right in the end. 



MODERN SLAVERY. 5 

Man is an exception to the laws of physical evolu- 
tion, and is a law unto himself; he has been given power 
to hold back the- progress of the world, although God 
will destroy him for his ignorance and folly. 

As our affairs in society become more and more 
highly developed, they become more and more import- 
ant as factors of evolution. We may well say that 
until a few generations ago the social world moved for- 
ward regardless of man, but as it moves to higher and 
higher levels, man becomes more and more an object of 
the world's regards. Man is given more power to inter- 
fere as the world advances, which power, when prop- 
erly considered, is the power to assist nature in the 
process of evolution. 

Nature has made a very rapid progress in natural 
selection within a very short time, and while she lifts 
some savages out of bondage, and brings them in com- 
munion with her God, there remain millions of savages 
waiting to be redeemed-. 

Man, according to Herbert Spencer, was never 
known to do right until he had exhausted all possible 
ways of doing wrong. 

To understand how men will grasp the reins of 
power and become kings and princes of finance among 
a slavish people, we need only to discover the same type 
in a primitive community, and by changing the surround- 
ings and the opportunity to tyranize we get our modern 
instance of the lucky millionaire. As a type of this 
character, the writer knew a man who was pictured to 
be an exceptional gentleman of his class, and it was a 
small class, but he occupied the unique prominence of 
having shot and killed three men. This man was ordi- 
narily quiet, hospitable and well behaved, and did not 



6 DISTRIBUTION. 

drink nor swear nor chew tobacco, but he was a gam- 
bler and sold whisky for a living. He had for a wife 
a quiet and modest woman, who was a good mother 
to several well-behaved children, and he held another 
young and pretty woman as his property, openly and 
in defiance to law and order. He kept, also, a pack of 
hounds that annoyed all the people thereabouts, but as 
he had killed three men, his hounds were treated with 
marked respect and consideration. His notion of fem- 
inine justice was displayed when in buying a new dress 
for his mistress, he bought an identical dress for his 
wife, so the mountain public could not charge him with 
invidious favoritism. He killed his men because they 
came into his lordly way and perchance attempted to 
win a smile of approval from his female property. In 
the last killing he carried a Winchester with shells 
loaded with buckshot; his first duty in the morning 
was to ti*y out the gun on a three-inch oak plank at fifty 
yards, the plank looked like it had been riddled with 
railroad spikes. He sought his man immediately who 
Vv^as unconscious of the death facing him at the time 
he fell. 

This aristocratic citizen of lordly temper was too 
cowardly to risk a return shot from a wounded antag- 
onist, and made sure that he ran no risk if he had the 
first shot. He had a trial as a natural consequence of 
his living in a free country, and he was acquitted on a 
plea of self-defense. He afterwards sent word to an- 
other mountaineer, who had opened a whisky shop with- 
in his territory, that unless he moved he would kill 
him. The other man not desiring to be killed, or to 
move, nor to wait and find out if he meant what he 
said, took the first favorable opportunity to kill this 
particular individual. 



MODERN SLAVERY. 7 

If you would understand the character of many of 
our successful men you may put this type of moun- 
taineer under modern surroundings, where his lack of 
soul, and his savage egotism can find a full field for its 
malevolent activity. Instead of the men gambling for 
the money of miners and lumbermen with a few bar- 
flies for 'touts,' give him the officers of banks and cor- 
porations and boards of directors and the undistributed 
wealth flowing ocean deep with its hundreds of millions 
of dollars seeking to gamble or invest in his enterprises. 
Instead of a few men who are denied all health and 
pleasure in life, bringing a few paltry dollars, and beg- 
ging for drink, give him the millions of poor to exploit 
who must beg for work to keep themselves and their 
families from want. 

Instead of the primitive idea of clothing the mis- 
tress no better than the wife, he has created our great 
White Ways blazing in light, shining in gold, brilliant 
in jewels where a throng of kept women ride swiftly 
in sumptuous luxury, splashing the mud from the street 
upon the patient wives and children who shrink back 
in confusion and shame. Capital is a coward we are 
told. No, it is not true, it is the capitalist who is a cow- 
ard, who fears for the men he has killed, and for the 
sins that will find him out, and who carries a Winchester 
loaded with buckshot, too cowardly to risk a return shot 
from his antagonist. He, also, has his pack of hounds 
who feed from his hand, who howl his praises to the 
world, and who reward him with a dog's fidelity and 
gratitude. 

When you are told that the great salaries and emol- 
uments of men of affairs are the natural rewards of 
conspicuous and exceptional talent, think before you leap 



8 DISTRIBUTION. 

in your judgment, think of the latest favorites of wealth, 
of the crown of jewels in the flashing light, and remem- 
ber the rewards of successful prostitution among the 
predatory rich. 

A chancellor of a university has gained some no- 
toriety by his overflowing praises of the virtues and 
talents of men of wealth and by diatribes against the 
drunkenness and vices of the men who work. He re- 
minds one very forcibly of the Oriental low caste woman 
who has no other hope for her female children but to 
spend patient years in training them to pander to the 
degenerate vices of high caste men, so they may honor 
her by being selected for the high caste Harem. 

It is quite true, and to their credit, be it said, the 
common people can scarcely believe that other people 
have the impulses, vices and ferocity disclosed by our 
newspapers. They cannot comprehend a life so selfish 
and lawless and so lacking in boundaries of order and 
decency. 

But we, as a rule, are hemmed in some safe har- 
bor with a round of daily duties marked out for us; 
we have never been thrust into the swift currents of the 
storm world of hungry wealth and wolfish desire, nor 
been drawn into the vortex of the underworld. We 
cannot, therefore, understand human nature as it changes 
when acted upon by unjust and unequal wealth and is 
thrown back upon primitive and savage passions. We 
are startled by the killing of a prominent man and 
read with horror of his ferocious passions of conquest 
among innocent maidens that led to the tragedy. This 
"Maiden tribute to Modern Babylon" is a sign of the 
times and of the reckoning to come. This utter lack 
of moral responsibility, this absence of all fear, except 



MODERN SLAVERY. 9" 

of being found out, and this foul consolation that money 
will pay all damage is not the result of mere individual 
failing, but is the result of a stream of filth engendered 
by our system of distributing wealth. 

Evil grows with what it feeds upon and injustice 
multiplies itself as it pushes back the safeguards of 
society. But a short time ago, and we heard of injus- 
tice and cruelty as though it was among a foreign peo- 
ple in the underworld of a great city, but daily it creeps 
closer and closer to our doors. We now hear of it all 
about us, it numbers among its victims our childhood 
acquaintances and we come in close relation to it. On 
every side there is evidence of great wealth and plenty, 
abundant riches is no longer a distance away, and in 
its near shadows, we see the hovering forms of poverty 
and despair our close neighbor. Unless a change for 
the better comes quickly we know that we too must 
cross the trail and face poverty and misery for our fam- 
ily. We feel the savage blood rushing to our temples 
and the primitive man under the skin stands ready to 
strike when danger comes too near. 

We are now at a time of great prosperity, which 
we call great because the mass of the people find ready 
employment at living wages, we forget how the standard 
of living changes. In these times of prosperity the 
greater part of the people^ can do no more than merely 
live from hand to mouth, and each day they are further 
removed from helping themselves and become more and 
more dependent upon distribution. We are told that 
wages were never before so abundant, and yet never be- 
fore has discontent been so acute, and if these times 
are the form and pattern of the future, then alas for 
the future. That civilization now faces a change is 



10 DISTRIBUTION. 

everywhere in evidence and in this change other changes 
must come and make conditions very much better, or 
very much worse. Ever since the modern age of indus- 
try began about 1830, there has been a succession of 
ahernate periods of prosperity and hard times and these 
periods were marked by the spreading of our people 
over new lands until they now cover the country. Dur- 
ing each of these prosperous seasons we made a spurt 
to realize the true level of wages, but we could only ad- 
vance by increasing our debts, and we were soon brought 
to a sudden stop by coming to the end of the chain of 
debt. These debts consist mainly of the increasing prices 
of land, and each advance only builds the final difficulty 
higher, and makes the burden heavier from day to day. 

It is difficult to - imagine why a sensible man need 
fear a radical change in our system of wealth, why he 
need be in fear of wealth getting into worse hands than 
those now controlling it. The very names of the men 
to whom we are indebted for the blessings of civiliza- 
tion, the inventors and students and builders of society 
are swallowed up in the greed of bankers and financiers, 
and the public rarely hears of them. The owners and 
managers and directors of our great enterprises assume 
a knowledge and importance that make them ridiculous 
and make their control of business dangerous. 

These men are the creatures and spawn of an un- 
just and iniquitous system of distribution who have no 
interest in progress, no appreciation of civiHzation, no 
sympathy with labor, no admiration for science and me- 
chanics and no use for religion. A change of control 
from such freebooting owners to men of technical 
knowledge and of mechanical skill is a consummation de- 
voutly to be wished. However complicated and con- 



MODERN SLAVERY. 11 

fused we find our problems we must remember that the 
distribution of wealth is behind them and covers them 
all and reaches to the far corners of every undertaking. 

Any derangement of distribution must, therefore, 
affect every inhabitant of a country and the disorder 
must increase and grow more complicated as the de- 
rangement continues, and when we discover the cause 
we may safely apply the remedy, and may feel sure the 
remedy itself must be harmless. 

In these strenuous days it is a favorite pastime of 
some writers to tell us stories of the Kings and Queens 
of other times and how they suffered for the want of 
conveniences, they could not even- imagine. By such 
comparisons we are reminded of the inestimable bless- 
ings we now enjoy, of telephones, electricity, means of 
travel, of parks, museums and libraries, and we are told 
that the every day comforts of the common people would 
be luxuries undreamed by Kings and Queens not longer 
ago than Elizabeth of England. 

Rabelais tells a story of a roast meat cookery in 
Paris where the cook found a porter eating his dry 
bread above the steam and vapor of his cooking. The 
cook seized the porter and demanded pay for thus fur- 
nishing the porter smoke from his meat, saying he was 
not obliged to nourish a vagrant porter he had never 
5een before. The porter refused to pay, saying the 
smoke would otherwise have evaporated, and the cook 
lost nothing. The dispute waxed hot and was referred 
to Seyny John, the fool of Paris, who after hearing the 
evidence, decided the cook was in the right and should 
ht paid for furnishing savory odors as an agreeable 
sauce to the porter's bread. The Paris fool thereupon 
decreed the cook was to have judgment and the porter 



12 DISTRIBUTION. 

was required to jingle small coin in the ear of the cook 
so he might be paid for the smoke of his meat with the 
sound of the money. 

The writers who enlarge upon our abounding and; 
marvelous prosperity speak the truth, and no extrava- 
gance of tongue or pen, no luxury of imagination can 
do justice to the wonderful and God-like stride of mod- 
em industry. 

The figures of our stupendous undertakings and 
the grand totals of our achievements pass beyond the 
power of our understanding, and we simple individuals, 
are amazed and stand filled with pride at our wonderful 
prosperity. 

Yet with it all, we feel a sense of want as though 
most of us were outside and were standing upon the- 
grating above the cook where we may only see the feast, 
smell the smoke and hear the music of the coin. We 
hear and read of hundreds of millions of dollars spent 
for railway terminals and equipment; of the most glor- 
ious and stupendous buildings in the world. We learn 
that our architects and builders now surpass the won- 
der work of Ancient Greece, and we build in a trice 
when formerly generations were required. We read of 
copper and its wonderful uses in the extensions of elec- 
tricity, of the advances made in great office buildings, 
and of modern hotels which no palace on earth may 
rival. When we begin to analyze our great prosperity 
we find it consisting of great things, and the day of 
small undertakings seems to be passing away. 

We do not hear of the mass of workers acquiring 
millions of new homes, and of getting independent in- 
comes from our marvelous systems of railways, steam- 
ships, telephones and telegraphs. But on the contrary. 



MODERN SLAVERY. 13 

alas, the census tell us more homes are lost than new 
ones are gained, and the mass of the people are con- 
tracting stupendous and increasing debts, which they are 
never to repay. A prominent public man of England 
in a recent visit to the United States during a time of 
our greatest activity, is reported to have said, "The one 
^reat predominating characteristic of your people, which 
most deeply impressed him was sadness." So soon and 
so true we have now become a sad people. We were 
taught from the earliest times that industry and thrift 
were the sure foundation of riches, and that ability and 
honesty alone was the sure bedrock of success. We 
look about us at the marvelous advances of men, at their 
undertakings, at the concentration in ownership, at 
riches piling mountain high. We see this concentra- 
tion of wealth making kings and princes and favorites 
of finance, without industry or ability, and without hon- 
esty or thrift, and we become a sad people. We ask 
why are all our great undertakings steeped in debt? 
Why are all our railways bonded with more debt than 
they cost to build? And piled high upon this debt, are 
other debts for equipment and terminals until no peg 
is left on which to hang an obligation. 

When we look abroad to consider the benefits the 
mass of the people enjoy, we find they are driven by 
the speed of steam and electricity, and are given scarcely 
time to eat and sleep in a mad haste to build with magic 
power tremendous totals of fixed property that a few 
men will own and control. We look again and we see 
the sums which have been paid to labor to do all this 
work, were secured by debts upon this property they 
create, and in this way labor is required to furnish the 
credit, and supply the value which other men manipu- 



14 DISTRIBUTION. 

late, who secure the ownership of the entire estate of 
man. 

No doubt, we have become a sad people because 
the lessons we were taught in childhood; lessons of 
working, of saving and of honesty, have become as fairy 
tales intended to amuse children, and as stories of gob- 
lins to scare them and hush them to sleep. Yes, we are- 
a sad people, because integrity has become a supersti- 
tion, honor an empty dream, and liberty has become a 
child's toy, in our mad scramble to secure unearned 
wealth. It has not been long since we were taught that 
debt was an evil thing, we were taught to avoid debt 
as we would avoid the plague, and a man deeply in debt 
was accursed. But now Aladdin's Lamp is a playthings 
compared with the magic power of debt, for debt now 
creates our kings and princes of finance, and gives them 
power and prestige without a parallel in the history of 
the world. We were taught to avoid debt because we 
were told that we were bound by our most sacred honor- 
to pay debts with our own hands, we contracted for 
our own benefit. Today the men of eminence, who 
occupy the high places of honor, the men who are re- 
garded as patterns of integrity are men who have grown 
great by contracting debts for their own benefit, which 
other men will be required to pay. The ability to sad- 
dle debts upon the back of labor through the ownership 
of land, and by the machinery of corporations has 
caused billions of wealth to concentrate to the men who 
now control all our means of transportation and finance. 

It is by this method that we corrupt the very 
source of integrity and pollute all the springs of honor. 
No kings or princes at any time in the history of the 
world could distribute favors with so lavish a hand as 



MODERN SLAVERY. 15 

the modern king of finance. Before our day the revenues 
of the king were derived directly from the earnings of 
the people and he could not thus surround the people 
with debts and have such marvelous machinery at his 
command so that more than one-half the population could 
be made the mere creatures of his will. We are indeed 
a sad people, as we look upon this spectacle of irrespon- 
sible power, as we see it make and unmake Presidents, 
Congress, Governor and Legislature, and as we realize 
that it holds all the sources of preferment in the hol- 
low of its hand, and as we see it lay the self-respecting 
in the dust and lift the beggar to a throne. 

Do these powerful princes of finance and their fa- 
vorites feel any gratitude to the mass of honest, dili- 
gent laborers who have thus dowered them with king- 
doms and principalities? Far from it, for they stride 
the world with the most impudent and collossal assur- 
ance, claiming that without their superior wisdom and 
without this grant of power, the common people would 
die of starvation. 

They not only keep their hands elbow deep in the 
pockets of labor in their own behalf, but they scatter 
other millions to equally shameless favorites, and add 
charity and benevolence in enormous endowments seek- 
ing to dominate the spiritual realm and thus again 
unite the church and state in a new king:. What defense 
do our public men and servants, the guardians of the 
interests of the people, make to this unparalleled slavery 
of debt. 

We are told, as though it was less criminal, that 
these debts are not to be now paid by the living, but 
will be paid by the future generations. So cunningly 
is this hold upon the property of the country secured, 



16 DISTRIBUTION. 

that these debts are never to be paid, but are to become 
a new form of slavery from which there is to be no way 
open to redeem mankind. Could sophistry go to greater 
lengths than to claim that the railroads we are now 
building, the mammoth hotels and factories, the coal, 
iron and copper we are mining and goods we produce, 
can be paid for at some future time? 

If these men we call financiers have discovered a 
plan whereby the unborn are to pay for our present 
works, they should carry this scheme to its logical con- 
clusion and earn the everlasting gratitude of the human 
race. If the future population may be made to pay for 
the greater part of our present belongings and enjoy 
paying for them, as we are told they will, why deny them 
the pleasure of paying for everything, and why not put 
the time for payment so far in the future that we, nor 
our immediate descendants, need work or worry about it ? 
There seems no absurdity too great to bring to the sup- 
port of our monstrous inequality of wealth and no sense 
of shame in advancing and supporting any outrageous 
doctrine. 



A Personal God tke Religion of 
Economics. 



Economics. 



CHAPTER 11. 

THE entire cause of the failure of our people to 
enjoy the blessings of civilization may be written 
large in one word ''Distribution." The wonder- 
ful advance of science has now made production almost 
automatic and fast approaching perfection. In times 
past the simplicity of production made it connect directly 
and intimately with distribution, and the one could not 
proceed far without the close fellowship of the other. 
We have made the most marvelous advances in our ca- 
pacity to produce aided by automatic machinery, but we 
have taken no thought about distribution, seeming to 
believe that when production was once accomplished, the 
work was done, and distribution would take care of 
itself. 

Modern production differs in many ways from that 
we have just passed. Science has changed our methods 
from the simple and direct to the compound and to the 
roundabout. 

Instead of each worker providing in a large degree 
for his own wants he now works for wages and is under 
the dominion of the market. 

Instead of a vast majority of men being engaged in 
producing simple things like shoes, and hats and food 
and clothing, which they may trade directly, they have 



18 DISTRIBUTION. 

been entirely separated from any direct connection with 
supplies. The greater number of laborers are now en- 
gaged at entirely new occupations; the railways alone 
employ one million men and have a population of about 
five million people depending upon them, and there are 
four million teachers and professional workers. 

Thus you may see a great change has suddenly 
taken place in the civilized world, entirely unlike any 
other period in the history of the race. 

You hear it repeatedly that laborers should receive 
in wages all the wealth they produce, and in times past 
when most men brought some concrete product to market 
and exchanged it for other products there was some 
direct connection between production and distribution. 

But now the most valuable and necessary labor is 
intangible, it is not engaged in creating commodities 
having a market price. Such labor must be valued and 
the value with which it is paid must be included in the 
market price of goods in order to be distributed. 

A man now works, not to feed himself with the 
products of his own hands, but because he must obtain 
a supply of value with which to buy what he wants. 
This struggle to obtain value on account of its pur- 
chasing power is necessary in order to live, is 
exciting in order to become rich, and furnishes us 
the motive, or cause, for all social activity. This neces- 
sity of securing value first before we may satisfy our 
hunger, our pride or our ambition, makes the distribu- 
tion of value the most important science in the world. 
Thus we find we are possessed with the most pressing de- 
sire to get money which, when once secured will relieve 
us from all fears of poverty and distress, however the 
required money may have been obtained. 



THE RELIGION OF ECONOMICS. 19 

In order to acquire money we depend upon distribu- 
tion and not upon employer and employed because the 
employer must also get money with which to pay the 
employed. Distribution is only possible through our 
markets, and every conceivable form of property must 
be valued before it may be offered for sale, and before 
the property so valued can be sold, the value with which 
to buy must have been previously distributed in the form 
of money or credit. The failure of all theories of politi- 
cal economy, of finance and of reform, is owing to the 
fart that value was held to be of no great importance, 
ar.d that distribution was held to be a matter of trade 
and transportation, a matter of barter made easy on ac- 
count of money. 

We cannot now estimate labor in terms of eoods, 
we car no longer say this man produces so much corn 
and should get so many bushels as wages, or another 
produces shoes and should be paid so many pairs. So- 
ciety is no longer made up of groups of families inde- 
pendent on each other, and who may supply their own 
wants. Society on the contrary, is rapidly becoming 
complete, when all manner of property, and all labor and 
supplies must contribute to the life of the body politic, 
and must obey the natural laws of progress. 

This separation of the individual worker from his 
means of life, making him helpless in supplying his most 
simple and pressing wants, has been recognized by re- 
form writers, but has been attributed to other causes 
than the true one. The Socialists, for example, point 
to the advance of machinery and to the division of labor, 
to the factory system and claim that men can no longer 
depend upon their own hands to supply themselves, but 
are harnessed to machines and thus become slaves to 



20 DISTRIBUTION. 

the owners of factories and machinery. In their argu- 
ment, the price of the product and the dependence of 
machinery upon the market has no place and they over- 
look the more important truth that machinery does not 
diminish the demand for labor. 

The introduction of machinery has enormously in- 
creased the demand for labor by developing many new 
classes of work at wages that keep advancing, and our 
dependence upon labor grows greater day by day. The 
land reformers seeing this separation of labor from their 
means of life, seeing the direct connection between pro- 
duction and distribution has disappeared, attribute the 
loss of wages and lack of employment to property in 
land. They claim that man is a land animal and when 
land is divided into individual ownership, he loses his 
, right to land and is thus separated from the earth, and 
becomes the helpless slave of the landlord. They fail 
to see the dependence of the landlord upon the market, 
and that he is limited in his demands by the price of 
goods, they fail to see, also, that it is the price of land 
and not the annual rent that does the damage to society, 
because the price of land prevents other prices from ris- 
ing, and thus prevents so much wealth from being dis- 
tributed. The m.oney reformers see this dependence of 
.modern labor and say that neither land nor machinery 
has anything to do with the case, and it is a problem 
purely of getting money away from the control of money 
lenders, because they say if men can always get money 
for their work and exchange the value of their prop- 
erty for money on demand, then they will buy the land 
and machinery as they need it. That value has any- 
thing to do with money, or that prices control the dis- 
tribution of money, or that natural law has power to 



THE RELIGION OF ECONOMICS. 21 

regulate its circulation has never entered into the minds 
of currency reformers. 

These conflicting ideas of reform are rooted to the 
primitive idea that the world dates from Adam and 
man came to earth full armed with all his present powers 
and capacit}^ To the belief that our civilization arose 
from the selfish conflict of greedy clans of men and fol- 
lowed inspired rules of religion, to the belief that our 
institutions and laws are accidents and happy compro- 
mises secured by a few great men, and that the history 
of the world is a history of its noted men. But when we 
consider the progress of science, the unfolding of natural 
law and the magnificent procession of evolution the view 
changes. When we look upon the world from the stand- 
point of science and the truths of nature, the importance 
of the individual man shrinks away, and the Almighty 
looms great on the new horizon. 

The view changes when we see the world consoli- 
dating, when we see men finding places and doing work 
vrithout a thought of any general plan, and as we look 
backward we find our progress has been carefully and 
intelligently planned for us. The modern world demon- 
strates to the student that we are working unconsciously 
to some great end, we are helping to achieve some great 
destiny, and that we are building society in obedience 
to superhuman intelligence. But a few generations ago, 
the civilized man of today was a savage, clad in skins 
of animals, who had to be taught, forced, coaxed and 
bribed into the task of building civilization. 

As a savage the man had a hatred of work, rein- 
forced by a million years of hereditary idleness, when 
he roamed the earth at will and gratified his passion of 
the moment. These savage men must be taught a lang- 



22 DISTRIBUTION. 

uage, be made to talk, write, print, to build and invent, 
and become the intelligent men we find today. In so 
doing, in so delivering the savage from his wilderness, 
there was only selfishness and brutality, hunger and pain 
as a foundation for the Great Teacher and Master 
Workman to build upon. Society must be built accord- 
ing to some plan and must obey some purpose and we, 
so far, have had no knowledge of this plan or purpose, 
but are engaged in working it out whether we will or 
not. 

To compel men to thus carry on as great a work 
as our" civlization presents to us, we must admit has 
required Divine Intelligence and Wisdom. To compel 
men thus to work who were confirmed in their hatred 
of all work, required some powerful insistance, and to 
this end they were separated from their means of life 
that hunger and pain should drive them into the paths 
of progress. They were taught, by hard experience, that 
they could gratify their savage desires easier by follow- 
ing a path marked out for them, than by following 
paths of their own choosing. In thus following lines of 
least resistance and of greatest satisfaction, they were 
induced to lay the foundation of our society and develop 
our present civilization. 

The position of value in this process of compelling 
men to follow new paths is not hard to understand, 
for as a builder may now employ workmen because he 
holds value in his hand, and because the workmen re- 
quire this value he is able to direct their work according 
to his plan. So the Master Workman holds value in his 
hand and bestows value where he wants work done, 
and withholds value where he would discourage work 
all over the civilized world. But we do not see the per- 



THE RELIGION OF ECONOMICS. 23 

sonal control of the Master Workman in building our 
civilization, as we see personal control in our small but 
imitative work, and we are just now becoming con- 
scious that we are being directed according to a great 
plan. 

In some of our great enterprises, like a great rail- 
way system, the connection between the workman and 
the management seems to be lost in the complex details 
of system, and laws of operation seem to control, yet 
the personal oversight of every workman is never lost 
or the laws of operation would fail. In society we have 
a great amount of evidence of the careful, intelligent and 
personal supervision of Deity which our ignorance pre- 
vents us from realizing and perhaps denies us commun- 
ication with Him. 

When we survey the field of modern industry and 
commerce we must be amazed at the wonderful strides 
we are making in every direction in such quick time. 
Progress has now so many sides, and has become so 
complex that no single individual can keep in touch 
with his own working department, not to mention the 
entire plan and work. 

This whole world of progress moves forward har- 
moniously and connectedly in obedience to one plan under 
a single intelligence, and according to an order not only 
beyond human control, but beyond human imagination. 
The most remarkable truths of our wonderful progress 
seem to contradict the science of material and physical 
evolution. Society does not travel the road of slow 
undirected growth, and does not depend upon hap-haz- 
ard selection and environment. We build our own en- 
vironment, and we direct the hitherto undirected forces. 
We harness them and we discover their laws; we push 



24 DISTRIBUTION. 

the car of progress with hydraulic jacks, we drive it 
with steam and we speed it hke Hghtning with elec- 
tricity. 

For the first time in the history of the human race, 
the individual has lost his power to interfere, to enslave, 
and to tyranize. Our industrial progress carries us along 
with reckless, heedless, rushing speed to some destiny 
that all past theory of state, of religion or philosophy 
is utterly unable to comprehend or estimate. Society 
now moves and grows as one great organism, uniting all 
the earth under one great economic government subject 
to universal natural law. 

All boundaries of church and state, all religious and 
social institutions are being merged by one universal 
plan for the progress of the whole world and for the 
benefit of all mankind. Between one day and the next 
we are taken from one world into another, and we are 
awakening to a new world, a world of ideas, where 
every material and physical force is being brought to 
the service of ideas, and we work with fevered haste 
and with inspired knowledge. 

The man who is now to be counted among the mil- 
lions must become a man of ideas, and one to whom 
an idea will be an inspiration for good work. We are 
faintly beginning to realize the nearness of God in our 
world, to feel the power of his hand, to learn of his imag- 
ination from its surpassing beauty, and we are begin- 
ning to understand His love from the joy and happiness 
we may give and receive. We are just beginning to 
see and realize that the individual man does not dis- 
cover and does not originate. The inventions, new ideas, 
and increase in knowledge are not the separate works 
of single men, but arise from out of the spirit of the 
times'. 



THE RELIGION OF ECONOMICS. 25 

All our inventions and discoveries are a part of a 
general plan, each one is linked to another, a discovery 
in one branch of science leads to a new discovery in an- 
other branch and adds something at another place that 
seemed entirely apart. In all this growth of knowledge 
and development we are like babies who are just awaken- 
ing to an acquaintance with the world around them, the 
baby perceives the light and smiles with pleasure or 
comes to know the heat and cries. 

So we, also, are children awakening to a newer, 
a more wonderful and more perfect world, we discover 
a law and we invent a machine without knowing the 
Father lays it in our path to stumble over that we will 
straigh'ten up taller and fairer with a higher conscious- 
ness. It is as though the personal God was ever at the 
elbow of some men to suggest new ideas, to lift them 
with His wisdom when they have the grace to receive it. 
It is in this particular direction, in this direct intelli- 
gent control over the path of our progress that social 
development seems to conflict with the laws of physical 
evolution. 

The growth of civilization, the rapid advance of 
science w^ithin a few years seems to force us to the con- 
clusion that God is ever seeking the help of man to 
hasten this work of building, and that without our help 
God has no personal power in the development of society, 
and man becomes his agent through whom He works to 
secure results in much quicker time. 

' Although we must admit that the idea of God car- 
Vies with it the idea of infinite power, and admit that 
all things could have been secured without direct help 
from man and with the personal attention of deity, yet 
this admission of infinite power involves the admission, 



26 DISTRIBUTION. 

also, of infinite time. But when time becomes definite 
and finite, then the idea changes and the personal atten- 
tion of deity seems necessary. We must always remem- 
ber that a finite and objective world unfolds before our 
eyes to satisfy and please our senses and to make our" 
lives delightful. 

Natural forces and laws acting alone but in obed- 
ience to Divine Will and suggestion would be able to 
build any world the Divine Mind would conceive, pro- 
vided time was unlimited. The slow minute changes 
made by natural processes alone could gather and accum- 
ulate such a world as ours in endless seons of time. 
But if, to these undirected forces, we add a personal and 
intelligent control, then we begin to shorten the time 
and increase the speed of development. 

Looking at human progress from this point of view 
the individual and not the race again occupies the cen- 
ter of the world's stage in the drama of civilization. 
Man comes closer to God as he learns the secrets of 
nature and how the work is done and how natural forces 
are controlled. When man begins to use the forces of 
nature and to direct his work according to law he gets 
into communication with the Divine Mind and partakes 
of the personal power of God. But man who arose from: 
the savage has the animal, as yet, most strongly in- 
trenched in his blood, and lest we forget, there is an 
endless variety of brutes and only one kind of God. 
This power by which we progress and which is outside 
of man has in time past seemed to reside in the digni- 
taries of the church and in the divine right of kings and 
emperors. 

But the rapid pace of this age of steam and elec- 
tricity has changed the opinions of men respecting the 



THE RELIGION OF ECONOMICS. 27 

seat of power, and we find it being now claimed by 
financiers, bankers and owners. Yet we are admonished 
by panics and hard times that this world-creating-power 
does not reside in church or state nor among particular 
men. Just at this time the chief impelling force is found 
in the markets of the world, and we may say with some 
truth that civilization is carried around the world by 
commerce, and that industry depends upon trade. We 
stand before the dawn of a new day with startling and 
radical changes knocking at the gate for admission, and 
the night is dark. We stand face to face with the need 
of a 'higher intelligence in our political affairs for we 
soon must write the laws of nature into our constitu- 
tions and frame them into the structure of the state. 

We are rapidly coming to the time when we can 
no longer experiment with legislation, when we must 
know what course to follow or be destroyed. We can- 
not go on blindly feeling our way as formerly, we are 
now required to see ahead and to divine the future ac- 
cording to law. We are not to have ten million years 
to build the structure of the social organism as was 
taken to build the human body. We leap great gaps 
in the line of ascent, we jump from one type to a type 
a million years in advance. Instead of waiting, for 
example, for the slow process of growing a system of 
arteries to allow for the circulation of our social blood 
requiring a million years of evolution, we now build 
arteries at the rate of ten thousand miles a year in the 
railroads of the United States. Instead of waiting for 
thousands of years on slow and undirected forces to lay 
out lines of nerve communication, we build telegraph 
and telephone lines by thousands of miles per month. 



^8 DISTRIBUTION. 

For these reasons among many others the modern 
world is unhke any time of the past and it calls for men 
with corresponding ideas and knowledge to take charge 
of its affairs. The consolidation of the world from sep- 
arate governing powers, feudal clans, and states into 
one great economic organism, is being marked out by 
one great economic law called distribution. 

Consider industry as you "will in any of its separate 
branches and you will find that progress in each line is 
connected with distribution and the influence of the 
market is world-wide. Inventions and discoveries can 
only come into existence and exert an influence as they 
are able to conform to distribution. One industry help- 
ing another, and giving help Avherever it crosses or 
touches another, is able to do so on account of the depen- 
dence established by distribution. There is no longer 
a power of landlord over tenant, of master over servant; 
vrhen the direct connection between production and dis- 
tribution was changed the power of one man over an- 
other man vanished with it, and we all now depend upon 
distribution and upon the prices and markets established 
by it. 



Saving m Time tne Cause of Progress. 



CHAPTER III. 

WE HAVE grown in wealth and power as we have 
been able to put machines to work and as we 
have learned to utilize the forces of nature. 
These forces of machinery and powers of nature are free 
gifts to mankind and our problem is one of distributing 
these blessings to each, according to his wants and ac- 
cording to his ability. Machines are only an advantage 
as they are automatic. A locomotive engineer sits in his 
cab with hands upon throttle and levers, a fireman 
shovels coal and the machine pulls three thousand tons 
on a level road at a speed of twenty miles an hour. 

In addition to the benefits of machinery we must 
add the raw material of nature which is also free. Coal, 
iron, clay, gold and silver are all donated to mankind 
without cost, hence you may well ask what we pay for 
when we buy diamonds or potatoes. We pay for dis- 
tributing these free gifts and not for producing them 
and although we may now estimate the cost of produc- 
tion as an item of expense, yet ninety per cent of such 
cost has been taken away and the ability of labor to pur- 
chase has so increased that the distributing price now 
governs the market. We can readily see the justness 
of this plan because some way must be determined by 
which the exact quantity and exact variety of an endless 
number of gifts are properly placed so as to develop 
civilization, and this proportion could not be arrived at 
except by the sums spent by each member of societ}^ 



30 DISTRIBUTION. 

Suppose a man has the monopoly of a machine and 
he dispenses with much labor and sells the product for 
a high price, he thereby gets rich and gains unjust 
wealth. The question is, does the machine produce the 
price of this product and is this machine turning out 
wealth without labor? Assuredly not, because the pro- 
duct must be sold to laborers who earn the money, be- 
cause the machine has no power to earn money. Price is 
made by the buying of men who earn the money by their 
work, and these men furnish the owner of the machine 
with money. A wheat field is an automatic machine 
more perfect and more marvelous than any of our at- 
tempts to approach it, and we have had enough expe- 
rience in growing wheat to know that the price of the 
crop is limited by our purchasing power and nothing 
can be paid for the time and work of nature. If our 
wheat crop was suddenly to fail we would pay a very 
high price per bushel, not because the wheat had intrinsic 
value, but because we could draw upon our credit so as 
to save the marvelous machinery hidden in the seed. 
Suppose there was no labor cost of production, suppose 
we could use machinery to the extent that all production 
was a part of our education and work became a pleasure, 
in such case would our products have a market price? 

We may suppose the modern world of wealth to 
begin when ninety out of every hundred laborers were 
working to provide the mere food and clothing for all 
the people; wages were then so limited that nine-tenths 
of the purchasing power was spent for mere subsist- 
ance, leaving but one-tenth for better living and improve- 
ment. As machinery was introduced more and more of 
this labor was set free, and the quantity and variety of 
subsistance increased with a diminishing cost to labor. 



SAVING IN TIME THE CAUSE OF PROGRESS. 31 

When machinery becomes complete and does its work 
automatic hke the machinery of Nature, there will then 
be no labor cost of anything in the market and all prices 
will be wholly the cost of distributing the blessings of 
<:ivilization. If our goods and commodities of every 
kind are represented as growing from plants, and cost- 
ing nothing, there will yet be a natural limit in the 
quantity of such products and a natural law requiring 
their proper distribution. We may therefore look upon 
commodities as growing from plants, free to whomso- 
ever may gather them, but they must be divided up into 
individual portions and distributed. This process of alot- 
ting to each individual his proportion of the free gifts 
■of nature is determined by the money he receives for his 
work and the prices this money makes in the market, 
as it is being spent. 

Let the reader impress his mind clearly with the 
truth that distribution is not the business of transport- 
ing commodities from producers to the consumers. Dis- 
tribution is a science of finance, and deals with money 
and prices, with the sums going to laborers as wages. 
The first, and most important act of society, is the dis- 
tribution of wages to labor, because the entire activity 
of all our railways, factories, telegraphs, telephones, 
steamships and farms, depend upon the money spent by 
laborers. 

It is a mistake to call machinery labor saving, be- 
cause it does not save labor, but on the contrary very 
greatly increases the demand for labor. If the reader 
will only consider such an example as the sewing ma- 
chine, he will find that the introduction of this machine 
has greatly increased the number of laborers engaged 
in hand sewing. Aside from single instances, we are 



32 DISTRIBUTION. 

now (1907) having a world-wide demand for labor ow- 
ing to the spread of machinery to South America, Asia 
and Africa. 

We are rapidly approaching a period when wages 
must rise over the entire world, or machinery must be 
abandoned and the world must return to Barbarism to 
begin over again. 

With but few exceptions the nations of the world 
are now beginning to bid against each other for laborers 
to supply the rapidly increasing world-wide demand for 
labor made by the spreading abroad of machinery. How- 
ever important .you may regard this growth of the ma- 
chinery of production, you will find the machinery of 
distribution is even more important. The machinery of 
distribution is almost as deeply mysterious as the ma- 
chinery of life, but we may study it and learn how it 
works, although its greater mystery may never be ex- 
plained. Money going into circulation and moving 
through all the channels of trade, paying wages and 
establishing prices is the visible effect of the machinery 
of distribution, while value is the cause which is hidden 
and mysterious. 

Money is the most useful and important of any of 
our automatic time saving machines, but money must 
pass through the hands of labor continually so as to get 
the supply of value which it carries about and distributes. 
The value of money arises from the fact that laborers 
receive a given sum of money for a given time at work, 
and labor time endows money with value, and from this 
foundation of labor time, money communicates value by 
its circulation to all forms of property. We, in the 
United States, now pay out about fifty million dollars a 
day in wages, and upon the circulation of this sum each 



SAVING IN TIME THE CAUSE OF PROGRESS. 33 

day all our prosperity and the value of all property de- 
pends. This daily sum of wages is the source of primary 
purchasing power, and of primary distribution, and as 
this rises or falls the world of wealth falls or rises to 
meet it. 

Based upon this primary circulation of money, we 
have a secondary source of power called credit, and 
based upon credit we issue a great volume of secondary 
money in the form of checks and drafts. 

Primary money going into circulation to employ 
labor enables the employer to save time and to use labor 
to the best advantage, and from this saving in time we 
get an increase in prices called profit, which means the 
margin of price above the cost to the employer. 

This does not mean that the employer may save 
some of the dollars and thus gain them, but that he 
spends all his money, for the more he spends to advant- 
age the more he may gain. The profit made from the 
use of money is secured upon the return of money for 
property when it is sold. But the mystery of money only 
deepens on this account because buying and sellings 
appear to be one transaction, and appear to be carried 
on at the same time, but buying from labor and selling 
back to labor has an interval of time between, owing to 
the roundabout methods of production. 

But yet the mystery remains because we deal with 
a fixed sum of money, and how may the sellers be get- 
ting more money than buyers all the time when the 
same money circulates for both sides at the same time? 

How, for example is a man to pay out a certain 
sum of money with his left hand, and reach for the 
money again with his right hand and always take in more 
money than he pays out. How is it that he may drop 



■34 DISTRIBUTION. 

« 

one-fourth of the dollars from his right hand into a 
pocket as a profit and pass the same number of dollars 
to the left hand to pay out and to again increase as the 
right hand gathers them in? 

How can such a process be made continuous with- 
out reducing the number of dollars in circulation and 
stopping the entire distribution? This explanation is to 
be found in banking, between the left hand paying out 
money to labor, and the right hand gathering it in, the 
money passes through a bank and is expended by the 
use of checks and drafts. 

Next in importance to money in the development of 
civilization comes banking; banks furnish reservoirs 
where free value may accumulate so that money may 
pick up this value and distribute it without waiting on 
the slow process of each dollar of actual money passing 
directly through the hands of labor. 

This store or reservoir of value accumulating in 
banks to endow money with life and activity is called 
a deposit. A deposit in a bank appears to be a mere 
innocent book account; something vague and intangi- 
ble, but next to the value of money itself, the free value 
deposited in banks is the most potent force in the civi- 
lized world. 

Deposits in banks indicate the net gains arising 
from improvements which are awaiting distribution. 
Deposits represent deferred purchasing power and are a 
credit accumulated by labor in one form to be redeemed 
in some other form. The most important use that can 
be made of deposits is to provide secondary money by 
which the currency is automatically expanded or con^ 
tracted without interfering with the functions of money. 
A depositor in a bank has the power to issue his own 



SAVING IN TIME THE CAUSE OF PROGRESS. 35 

money to the full value of his deposit. This money is 
redeemed and re-issued constantly by exchanging checks 
for actual primary money and if bank checks or second- 
ary money, could only be issued dollar for dollar of the 
money with which to redeem them, if the banks had to 
retain a sum in cash equal to the sum of deposits, then 
this secondary money would be of no benefit. 

But experience has proven that this secondary 
money of banks may be issued or expanded to about six 
dollars of credit money for each dollar held in reserve 
by banks. The most important work done by our bank- 
ing system is thus to expand the currency without inter- 
fering with its value, and allow prices to rise, and to be 
distributed over the market, and more particularly to 
assist in the distribution of these same deposits and allow 
them to go into new development. 

Probably the most difficult and most important 
truth in the entire world of finance arises in the relation 
between primary and secondary money. Not only is this 
relation of great importance in banking, but it is even 
more important in an understanding of the labor ques- 
tion, and of the distribution of money as wages. 

Primary money or cash must necessarily be limited 
in quantity and of fixed and stable quality so that its 
value will be unquestioned, and so it may circulate with- 
out resistance or difficulty. But if we had to depend 
upon primary money alone, we would never correct the 
natural inequalities of distribution and human greed 
would be greatly strengthened. 

Primary money must circulate from hand to hand, 
it must pass back to labor after it is spent, so that it 
may be endowed with a new supply of value. 



36 DISTRIBUTION. 

Primary money moves slowly but it alone has the 
power to save time, to make prices, and to gather pro- 
fits. The owners of money control the most powerful 
automatic machinery Nature has ever produced and by 
this control of money they may limit and prevent all ad- 
vance in civiliziation. It is by the invention of secondary 
money that profits are returned to labor, and that money 
is able to expand and prices increase. 

Nature is necessarily unequal in the primary dis- 
tribution of wealth, because the gains arising from the 
use of money must all go to the owners of money with- 
out regard to the service the owner may render. These 
gains are profits and they represent not something stolen 
from labor, but something given as a bonus by nature. 
If we were to depend upon primary money alone there 
would be no way of getting the gains of civilization dis- 
tributed among the people, and we would be limited by 
the fixed volume of primary money to a fixed and un- 
changed social condition. 

Primary money could only circulate to labor once 
and then must be returned to labor to be endowed with 
value, and the gains made by the use of this money could 
never be distributed beyond the owners of money except 
by charity. But when the gains in civilization become 
profits and are deposited in banks we accumulate reser- 
voirs of value, and we need not then wait on the slow 
circulation of every dollar to return to labor, to have 
its value renewed, but can call upon our reserve of value. 
We then have an opportunity to create a secondary dis- 
tribution of wealth by an expansion of the currency and 
this will cause a rise in prices. This rise in prices, 
brought about by expanding the currency, is the auto- 
matic method of nature, whereby the gains in civiliza- 
tion are to be distributed to the mass of mankind. 



SAVING IN TIME THE CAUSE OF PROGRESS. 37 

Unless we could thus expand the currency we would 
be absolutely limited to a fixed wage for labor, and a 
fixed status for society. But when once we have a money 
that may automatically expand and contract in obedience 
to the natural machinery of distribution, we alone are to 
blame if wealth is unjustly distributed. Currency re- 
formers have recognized the importance of rising prices 
in order to secure a wider and more equitable distribution 
of wealth, but they make a grave mistake in advocating 
an expanding issue of primary money which could only 
intensify the unequal conditions. 

If primary money is issued without a limit to its 
expansion, it would soon entirely destroy the value of 
money and all that money means to civilization. 

In the circulation of secondary money we will see 
the cause of our brilliant seasons of prosperity, when we 
spend increasing billions each year, because we have an 
expanding currency at hand to distribute the profits 
gained from rising prices. 

While prices are rising, the farmer, the merchant, 
the trader, and manufacturer gain rapidly in wealth, and 
the gain is thus widespread, and is communicated to the 
entire countrv^ 

In dull times the annual trade in the United States 
is about twenty billion dollars in round numbers. When 
deposits begin to flow from banks into new business and 
begin to increase the demand for labor, then prices will 
rise and profits will increase. 

At such time the rise in prices will add, let us say, 
ten per cent to the value of the property being exchanged. 
This advance of ten per cent in a total of twenty billion 
a year means a gain of two billions in volume of profits, 
and this gain may become secondary money and expand 



38 DISTRIBUTION. 

the currency. This rise in prices cHmbing quickly into 
hundreds of milHons, and then into 'bihions, will widen 
the activity of production on all sides and consump- 
tion will keep an even pace with production. As profits 
grow into greater deposits there will come a new expan- 
sion of money which, on again going out, will repeat the 
impulse to greater activity. Trade will thus jump in a 
few years from a total of twenty to thirty billion dollars, 
and prices again advancing over this new and wide fields 
will open up the ball and begin the mad race for unearned 
wealth. 

Whips will then be applied to horses and men, steam 
and electricity will be driven at topmost speed as we revel 
in the golden rain of dollars, the cry will be, ''On with 
the dance! More speed! More music! More frenzy!" 
In this wild race for money we ask ourselves, Where will 
it end? If we are insane, if the world has gone mad, 
what limit will we meet? Where will we stop? There 
must be some limit to this piling up of a higher price 
upon prices already advanced many times; a limit upon 
expanding^ a currency expanded many times before, and 
upon the reckless and extravagant schemes to gain these 
growing paper profits. We know that there must be a 
limit ; we cannot thus keep on doubling money and prices 
and profits without end ; there must be some law regulat- 
ing distribution, some return to first principles. There is 
a limit beyond which we may not go in this mad struggle 
for wealth, and we would never rush blindly to this limit 
except for the fact that billions of dollars fail to go to 
those who earn them and become glittering prizes of 
unearned wealth for those who may secure them. 

The limit to which secondary money may thus ex- 
pand credit and prices is fixed by the volume of primary 



SAVING IN TIME THE CAUSE OF PROGRESS. 39 

money, and the limit to the volume and circulation of pri- 
mary money is fixed by its necessary return to labor to 
secure its value. 

These billions of value added to prices must travel 
back again through the wage fund or they cannot be 
sustained and be redeemed. And failing in this, they 
must crash and fall. 

In a regular distribution of wealth, profits get back 
into the wage fund by being spent for new construction 
and for a greater volume of goods at higher prices, and 
profits fail to get back when they are invested in land or 
property not created by labor. When there is such a 
failure of deposits to return and when bank deposits seek 
investment outside the labor market, they are not dis- 
tributed, and do not break up to buy labor or goods. In 
such case these deposits remain intact as a mass of credits 
on one side and debts on the other side, and are being 
continually loaned and reloaned, but continually increase 
in quantity. This growth of deposits requires the banks 
to maintain a corresponding growth of reserve in primary 
money, and the volume of money concentrating to banks 
must keep pace with the increasing volume of deposits. 

The absolute limit which the total deposits may 
reach before reaction sets in, may be put roughly at five 
times the volume of currency. We have at this time, 
for example, January, 1907, a volume of about three bil- 
lion dollars of currency, and when deposits reach a total 
of fifteen billion dollars, we reach the limit of expansion. 
At such times the banks will have contracted the total 
volume of money by half and will hold fifteen hundred 
million dollars as reserve which they dare not loan, and 
this will cause a widespread stringency of money. Then 
will begin the reaction, and we will then have a violent 



40 DISTRIBUTION. 

contraction, also, in the circulation of checks, and this 
will again aggravate the money famine. When banks 
are loaned ''full up," and new loans cannot be made, the 
volume of expansion has met its limit and contraction 
is about to begin. 

When deposits are first loaned out, the loan becomes 
a new deposit to be checked against, and thus provides 
secondary money. If all loans were paid as they fall due, 
and all profits were invested in labor products, this action 
of loans and deposits would be automatic and would 
never press upon the limits of expansion. But owing to 
the unequal distribution of wealth, the depositors in 
banks soon divide into rich and poor in about the same 
ratio as outside the bank circle. Banks find that loans 
are not paid when due, and the character of depositors 
changes from men who were using their deposits con- 
stantly to men who have no use for them. 

As loans are not paid and must be renewed, a vio- 
lent contraction in the circulation of checks will follow. 
This contraction of checks and the contraction of money 
in circulation at the same time, stops the increase in busi- 
ness and turns the tide of rising prices. 

When circulation expands on account of an increase 
in primary or secondary money, this expansion can only 
get into circulation through the daily wage market, and 
is communicated from this market to other property. 
Therefore changes in price, either up or down, must have 
their nev\^ measure taken by being exchanged for basis 
mone}^ and prices are limited in this way. To make this 
matter clear we will suppose our present wage rate of 
fifty million dollars a day will sustain our present range 
of prices. An accumulation of purchasing power that 
fails to be distributed, seeks investment in the property 



SAVING IN TIME THE CAUSE OF PROGRESS. 41 

market and bids up the price of property without in- 
creasing the purchasing power of wages. 

The effect of such investment would be to increase 
the purchase power of one class of property, while the 
source of purchase power and the measure of it remains 
unchanged. But for our facility of getting into debt, 
there would be a quick reaction w^hen the price of one 
class of property rose above its true level, but the easy 
method of putting off payment, and of never exacting 
full payment, leads to a wide inequality before we have 
a collapse. In order to put off the redemption of this 
accumulating purchase power, it is necessary to offer a 
desirable investment, which may be done by taking a 
share of the profits to pay dividends upon new debts. 

Let us take our present circulation of money day by 
da}^ and follow it: We now pay out in wages fifty mil- 
lion dollars each w^orking day, and owing to the time we 
save by the use of money and machinery, this fifty mil- 
lion dollars a day will gain a profit of twenty per cent, 
or ten million dollars each day. We work one day and 
we call upon our volume of money to furnish fifty million 
-dollars to pay labor, and then we work the next day and 
we call for another fifty million dollars; and so continue 
from day to day until the money paid to labor is able 
to get around to the place of beginning in sufficient vol- 
ume to keep all of our activities going. 

Each day this fifty million dollars will deposit its 
profit, and ten million dollars in profit will thus accumu- 
late day by day for secondary distribution. In five days 
fifty million dollars will accumulate, which is equal to 
the total wages of one day. Now it will be clear that 
this credit or option will not be allowed to accumulate 
for twenty days, when it equals one week's work, and be 



42 DISTRIBUTION. 

redeemed so quickly as to take the entire proceeds of 
labor for one week. The way in which accumulated prof- 
its may be redeemed by labor is to exchange them for 
money and call upon labor to redeem this money. This- 
growing surplus is intended to increase the demand for 
labor, and thus allow labor to share in secondary distri- 
bution. 

But if this enormous accumulation of profits may 
be so divided that only a small part called interest is. 
spent for labor and the principle is continually invested 
in land or like property, then the secondary distribution 
upon which labor depends, will fail. 



Ho^v Great Fortunes Grow. 



CHAPTER IV. 

FOR the purpose of illustrating the rapid accumula- 
tion of wealth in our own times, we will imagine 
a young man of most exemplary habits, of relig- 
ious temperament and of economy and thrift, who dreams 
by day and by night of becoming the richest man in the 
world on account of an idea. In our problem of distri- 
bution we have a tremendous sum of daily profits that 
fails to be distributed because it is in the hands of men 
who do not care to take the risks and chances of business 
and who are therefore anxious to loan this money at a 
small interest, or who buy property in land which is not 
subject to ordinary risks and loss. This sum of accumu- 
lating profits amounts in round numbers to ten million 
dollars per day, and it is this sum seeking to avoid em- 
ploying labor, but to so invest as to command labor, that 
gives us our problems. 

It was this pressure for investment causing an in- 
tense war of competition that deeply impressed our young 
man of dreams, and inspired him with an idea of doing 
away with this conflict and competition by furnishing a 
stable business at fixed prices and allow these competing 
millions to be invested in his own various undertakings. 
This idea of centralization and monopoly was not all a 
dream ; it was more of an inspiration, because the unpar- 
alleled forces of nature were then working to secure the 
same end, and were seeking to reward the man who could 
direct the wayward forces and bring them into line with 



44 DISTRIBUTION. 

modern development. And at the same time we were 
in the midst of a wonderful introduction of machinery 
wherein the capital required to produce the enormous 
products was greatly increased, and where the relation 
established between all lines of industries was making 
competition very difficult and very dangerous. It is 
dreams such as these that puts a man on horseback to ride 
up the steps of a palace and mount upon a throne because 
the stars light up his pathway and the forces of the uni- 
verse are ready to do his bidding. In looking about to 
realize his dream of riches, he saw the chief obstacle to 
overcome was competition, and he saw how his idea of 
centralized ownership would hold competition in check 
and would prevent its ruinous interference and make it 
more difficult and dangerous to undertake. As the mind 
of this young man traveled forward seeking roads to suc- 
cess, he discovered that great riches was not to be ex- 
pected by the mere banker and money lender, as other 
men had calculated, but that the source of all gains was 
in the profits derived from industry of which the money 
lender received a small share. 

With this discovery the idea began to grow and the 
size of the reward began to increase, for he was to con- 
trol prices against competition, and this would allow him 
the greatest possible profit. Centralization, when it could 
control the market against competition, would be able 
to buy its raw material and labor at the low level of the 
outside market and would sell at a monopoly level, giving 
the highest price and the widest possible margin of profit. 
This advantage in one industry alone, where a large vol- 
ume of business was selling to every family, would in 
time concentrate all the property in the country to the 
men who so controlled this one industry. 



HOW GREAT FORTUNES GROW. 45 

In looking over the industry, which our man of 
dreams was fast securing control, he found the annual 
profits, although subject to losses from competition, to be 
greater than twenty-four per cent, and he found money 
in great volume seeking men to use it at less than five 
per cent. The imagination of our man with an idea 
leaped forward to the sources of money and to methods 
of gaining control of other industries one at a time. He 
looked about him at the stress and w-aste of competition, 
of plants being duplicated, business being divided, and 
profits cut into many parts by division among warring 
factions. He saw four competing firms dividing* a busi- 
ness and profits giving them ten per cent each, where,, 
had his plan been in control, one business would have 
declared forty per cent and would have also have made 
great savings in expenses. He contrasted the business as 
he saw it, sinfully wasteful, cheating and extravagant, 
with the golden sunrise of his dream, where prices would 
be regular and waste eliminated. Looking over the one 
industry fast coming into his control, and dreaming of 
conquest as Alexander dreamed of having the world at 
his feet, our man with an inspired idea begins to plan 
for money to buy control, because the slow process of 
accumulation took too much time, w'hile this frightful 
waste was in progress. He talked his idea of centraliza- 
tion to the men of money he could reach, and like other 
great pioneers of thought, he was held to be dangerous 
and reckless and was forced back to depend upon his own 
powers and those of his near friends and associates, to 
whom he was something more than a mere man. 

The money with which to buy, the sums to be re- 
quired, were not to be measured in the paltry dollars to 
be secured by himself and friends upon paper discounted 



46 DISTRIBUTION. 

in banks, but millions and tens of millions and untold 
other millions beyond would be needed to carry on the 
campaigns he planned. The industries and railroads to 
be centralized would require billions, and the yearly pro- 
duct of goods sold was now fast approaching ten billion 
dollars in manufactures alone. Consider the soul-stirring 
ambition to conquer and rule in this industrial world, a 
simple citizen, with an army of peaceful and contented 
labor, with artillery of gold and paper ; consider the am- 
bition to subjugate a world more difficult and dangerous 
than the campaigns of Caesar, and requiring more skill 
and daring, more tact and genius than Napoleon. 

Thinking of money, millions of money, tens of mil- 
lions, hundreds of millions, the imagination at last 
coupled the vast accumulations of profits, the millions of 
idle money seeking investment to his car of centraliza- 
tion, which was then hitched to a star. Again the imagi- 
nation leaped forward, but now to the fulfillment, to the 
accomplishment, to the artillery and ammunition and to 
the plans of campaign. To buy a railroad system or any 
branch of industry and thus secure a stable price and a 
certain profit meant earnings of not less than twenty-four 
per cent, and money in millions was to be had at six per 
cent or less. Bonds could be sold that would require but 
one-fourth the earnings if the price of the industry was 
not too great and the industry so secured would return 
eighteen per cent, and all the future gains would accrue 
to insiders and he would be behind the sacred altar of 
the inner temple. 

To secure one industry and reorganize it, to issue 
bonds enough to get a return of the purchase money, was 
to open up a clear path into all of the works of the enemy. 
This source of money once tapped, this idle money seek- 



HOW GREAT FORTUNES GROW. 47 

ing investment, would provide an unfailing stream to 
accomplish his purpose and at the same time relieve him 
from this same money seeking to compete and destroy his 
profits. He was now about to turn the flank of the enemy 
and to strike in front and to cut off retreat in the rear. 
To conquer this world was now but a question of moving 
forward and to establish breastworks to repel the attacks 
of the increasing army of opposition. 

But the battle was not to be won in a few years with- 
out fierce opposition from this same competition he was 
seeking to put under control. The one industry in hand 
W'as now remarkably successful, and was attracting em- 
barrassing notice, and as this industry was to furnish the 
base of supplies and the road for retreat, it must be de- 
fended at all hazard. But now this success began to 
appear phenomenal and this new idea began to attract 
•disagreeable attention from men who were without the 
soul-inspiring idea of centralization, but who were for 
w^ar, for competition, for a seat among the mighty or 
for a fight. And his success, instead of inspiring other 
men to follow his example, created an army in opposition 
to force him to return to the old ways or to be destroyed. 

But like other master minds of rare courage and 
genius, he had calculated with his host and never faltered 
nor was he ever dismayed, but met the rising tide of vili- 
fication, abuse and hate and bitter war without a thought 
of changing, as unfaltering as the stars in their courses. 
His plan of greater conquest was soon moving forward 
on the strongest outposts of the enemy, scorning the 
weak places, but seeking the grounds of greatest advan- 
tage and security. One industry secured, bonds issued 
and sold, and the money received not only paid for the 
property, but gave a considerable surplus. And in this 



48 DISTRIBUTION. 

way the idea advanced from one industry to another^ 
from one railroad to a system of railroads, and is now 
moving forward to a railway kingdom. And the idea 
has now its host of new millionaire imitators who have 
reaped a golden harvest as camp followers to the main 
army. 

That this is not a fanciful picture is made evident 
when we call to mind the career of one man who, between 
young manhood and before old age, has become the most 
powerful man of wealth in the world. Moved by the 
force of this idea of centralization, he, with a few fol- 
lowers and associates, now control and dominate the 
industries and transportation of the United States, and 
they own billions of the total wealth of the country. 
From this commanding position, secured in less than a 
generation, consider a moment the increasing size of these 
rapidly increasing millions and their increasing power of 
absorption. This conquest of industry was based upon 
two principles, one of which was rightly estimated ta 
be of priceless benefit to mankind, while the other is a 
fatal error. 

To buy at the level established by competition and 
to sell at the level established by monopoly, was to enjoy 
the greatest industrial power upon earth. This difference 
in levels, in one branch of industry alone, would in time 
force all other property into the hands of men who held 
this advantage. The days to pass before supreme con- 
trol was to be secured, were shortened as one industry 
after another came under the sway of this remarkable 
"System." Whether or not there was the foresight here 
described in this conquest for power, nevertheless the 
laws of economic forces determined that success must 
follow these lines and events opened the paths when fore- 



HOW GREAT FORTUNES GROW. 49 

sight failed. While it was rightly estimated that prices 
must be held uniform and stable and competition must 
be kept under control, the true source of the vast sums of 
idle money seeking investment was overlooked and the 
future consequence of this continued surplus will wreck 
this ambitious structure unless distribution is corrected. 

The first industry under control was one in which 
the product was most widely demanded, and was of in- 
creasing usefulness; the raw material was so difficult to 
estimate that the control of the manufacture could so 
limit the price of raw material as to keep the supply level 
with the growing demand. Since the product of this 
first industry was sold in every family, however poor, 
the ultimate source of the market was thus demonstrated 
to arise from the w^ages of the people, and this fact must 
have been impressed upon the minds of these men. For 
this reason w^e find they have ever been consistent advo- 
cates of higher w^ages, and their example has changed 
the entire treatment of labor in the United States. 

Under the theories of competition it was held that 
the greatest advantage lay w^ith the man controlling the 
cheapest labor, and the pity of it w-as that brutality was 
everywhere encouraged and talent overlooked. In times 
past, the most successful overseer was thought to be the 
man who could cut wages to the lowest notch and drive 
men to the last ditch. But now volume and skill and 
organization are recognized as the requirements of pro- 
duction, and a high wage rate is fast becoming to be the 
necessary condition for a successful business. There are 
reasons to believe these men estimated that the millions 
seeking investment were derived from the savings of the 
people, which they would invest judiciously for them. If 
we now add a religious temperament to this conquering 



50 DISTRIBUTION. 

ambition to obtain control of the industrial world, we 
may picture to ourselves the benevolent feudalism they 
contemplate when their plans are at last fulfilled. 

All the industries of the country are to be centralized 
under one board of control, and labor is to be paid what 
they consider a high rate of wages in order to sustain 
the market. Labor is to have plenty to eat and wear, 
with free churches, free libraries, free parks, free baths, 
free music, because he will have no opportunity of becom- 
ing an independent owner of anything. The one great 
mistake in all this calculation is that the source of the 
idle millions seeking investment is to be found in the 
pinching economy of the wage earners. 

The truth was overlooked that this vast surplus 
value is the gain arising from the continual progress of 
civilization which has failed in distribution, and such 
failure has kept the mass of the people from getting the 
benefits of civilization. As competition is being super- 
seded in one industry after another, this difference in 
levels between prices will diminish and at the same time 
the necessity for tremendous loans will also have passed. 
But prices must in some way be sustained by wages, and 
surplus value must in some way be prevented from again 
undoing the great work, and the only way open is for 
this surplus value to be properly distributed in wages so 
that the mass of the people may buy these centralized in- 
dustries and enjoy the income from them. 

So long as borrowed millions are being spent to 
enlarge existing facilities, to increase machinery, and 
plant, to build more railways, to add tracks, rolling stocks 
and equipment, there is a large part of the surplus re- 
turned to the wage fund, large enough to keep labor at 
work at standard wages, when his own wages would 



HOW GREAT FORTUNES GROW. 51 

have failed to do so. But we have a succession of panics 
wherein this partial failure to distribute overtakes pros- 
perity and brings on labor troubles and hard times. 
While one group of men were thus engaged in getting 
control of industries by offering an investment for idle 
money, they were subject to competition in another form 
that could absorb all the idle value, and this other form 
of investment did get five times as much of this value as 
did the centralizing financiers. 

Financiers could take a part of the profits with 
which to pay interest on bonds, and such part could only 
be taken after ground rent had first been taken. Ground 
rent increased with every advance in civilization, and 
offered a better investment for the idle millions than 
some of the bonds. In all this advance in centralization 
to date, the tremendous balance of benefits has been on 
the side of the general public, in higher wages, in better 
corporation service and in a much better standard of liv- 
ing. 

But while a few billions of wealth were thus con- 
centrating to the owners of our industrial system, the 
increasing value of land was taking its tens of billions, 
rolling up a mountain of iniquity, increasing crime, sui- 
cide and insanity, growing up to destroy civilization un- 
less we apply a remedy. Property in land follows the 
same line in securing these idle millions that is followed 
by corporations except that no bonds are required be- 
cause the debt power is already in existence in the power 
to collect rent. 

The increasing annual rent demanded by owners of 
land furnished the basis upon which land sold for a con- 
stantly increasing price, and every time the rate of in- 



52 DISTRIBUTION. 

terest declined ten per cent, the total value of land 
advanced, so as to absorb a ten per cent gain in its price. 
When the price of land advances under a stimulation of 
buying, the drain upon the money becomes so great as 
to check all other demands, and prices fall, and a panic 
and hard times follow. 



The Part Prices Play m DistriDution. 



CHAPTER V. 

AS OUR increasing" population spreads over new 
territory, and over wider fields, it can only do 
so as prices rise or as wages fall owing to the 
limit established by the value of the land. As we go 
ahead we need increasing quantities of all kinds of sup- 
plies and we must use thinner and poorer veins of metals 
and mineral, we must cultivate and improve under 
greater costs farther from the markets. And unless 
prices rise or wages fall, we cannot develop this more 
difficult territory and population congests in slums and 
poverty grows. 

This dependence upon higher prices may be well 
illustrated by the present boom in the copper industry, 
the rise in the price of copper from 14 to 24 cents 
a pound causes a flow of population and capital over 
a very wide teritory, to develop mines that will pay 
wages and profits with copper selling at 24 cents a 
pound, that cannot be developed with copper selling at 
14 cents. Conversely when the price of copper falls on 
account of the present rise in the price of land, there 
will follow an adverse movement in which capital in- 
vested and labor employed near the margin of profit 
must lose, and such enterprise must be abandoned. 

But for our advances in science whereby new gains 
in purchasing power are being added to wages we would 
be held to a dead level of poverty and misery by this 
limit and could only get room for more population by 



54 DISTRIBUTION. 

-reducing wages or profits. We cannot extend business 
over new fields and open new mines and forests indefi- 
nitely and when we consider the extent of territory we 
have explored within fifty years we may see that the tide 
is now turning back upon us, our own people are cross- 
ing our borders into Canada in the hope of finding an 
independent existence in a new territory. When the 
value of land sets a limit to all other prices we advance 
in civilization by moving on new lands or by putting 
new machinery at work, or by new discoveries and in- 
ventions. 

New advances in science increase the gains or pro- 
fits of industry and we increase our standard of living 
by the new occupations and higher wages we pay. But 
the land market will follow every season of prosperity 
by an advance in price of land and when the price of 
land gains its share of the new development a new limit 
is fixed which prevents any general or permanent rise 
in wages or profits. 

The discussion of theories about money has led to 
much confusion regarding prices because the substance 
and solid foundation of prices is not distinguished from 
the mere name of dollars and cents. When we say for 
example that copper metal sells for twenty-four cents a 
pound we are giving a name, 24 cents, to the value of a 
pound of copper. We may increase the volume of 
money and change this name of copper from twenty- 
four to thirty cents a pound but the value of copper will 
not change. What we are concerned about is the rela- 
tion which a price of one commodity bears to the price 
of another commodity and this relation is determnied 
by the limit to the total price of all property. When a 
given volume of money once establishes a given series 



THE PART PRICES PLAY. 55 

of names or level of prices it does so because the value of 
money sets a limit to the total price, and the laws of 
distribution determine the relation which a price of one 
kind must bear to a price of another kind. 

We are concerned only with the fact that a level or 
limit of all prices is determined by natural laws and the 
proper distribution of wealth depends upon an equal 
relation between prices and does not depend upon the 
volume of money by which a level is established. With- 
out any change in the general level of prices we have 
great changes inside this limit which produces our in- 
equalities of wealth. The price of land operates to dis- 
turb the natural relations between all other prices because 
of the limit to which all prices must confonn, and when 
land sells for a price it reduces the quantity of value to 
be distributed for other prices. 

These differences of prices inside the limit gave us 
our margins of profit and when land sells for a price it 
reduces other prices and reduces the margin of profit 
and thus sets a new limit beyond which development 
cannot proceed. In order to arrive at some basis for 
comparing prices and recording changes inside the 
natural limits and to avoid the confusion arising from 
the volume of money we have a standard for comparing 
the prices of one year with prices of other years known 
as Dun's Index Figure. To arrive at a basis, the prices 
of a considerable line of goods and building material 
are taken and divided into classes and this level or aver- 
age is given an index number 100. 

When in any given year, the prices of any class of 
goods rise or fall below this basis the percentage will at 
once be shown by the change in the index number for 
that year. We find for example that the index number 



56 DISTRIBUTION. 

for all commodities and building material for the year 

1897 was 72.4, while for the year 1906, we may safely 
estimate the index number at 100 as it was 98.3 in 1905. 
This indicates a general rise in the prices of consumers' 
goods of 27 y2 points or about 35 per cent. In 1897 
when business and wages touched bottom we began a 
new advance and a new period of prosperity, which was 
brought about by the reinvestment of profits in new 
business. Prices advanced from the low level of 72.4 
in 1897 to 102 in 1903, which was the crest of the wave, 
then real estate became active and turned the tide of in- 
vestment away from the general market. 

Suppose that we begin an illustration with the year 

1897, that we credit a gain in prices of ten per cent, for 

1898 upon a business of twelve billion dollars for that 
year. This advance in prices of ten per cent, meant an 
increase of more than one billion in wages for the year 

1898, and business increased from twelve to thirteen and 
a quarter billion dollars. In 1899 the same gain of 10 
per cent, or more would add one and one half billions 
to the wage fund, and our business would rise to fifteen 
billions. In 1900 the gain would add another billion 
and a half dollars to the total and by the end of 1902 
we would be doing a business of twenty billion dollars a 
year in consumers' goods. The advance of the various 
items was far from being regular, pig-iron for example 
sold approximately nine million tons at fourteen dollars a 
ton in 1897, and twenty-five million tons at twenty-four 
dollars a ton in 1906, an advance of seventy per cent, in 
price and one hundred and sixty per cent, in quantity. 
Copper metal advanced from eleven cents to twenty-four 
cents, about one hundred and twenty per cent. 



THE PART PRICES PLAY. 57 

In general classes the advances as given by Dun's 
figures are as follows : Breadstuffs, eighty per cent., 
meats, fifteen per cent., dairy and garden, fifty per cent., 
clothing thirty per cent. This difference in the various 
levels of advance indicates the degrees of competition 
and the inequality in the distribution. Had the enor- 
mous profits which were reaped from this advance been 
returned to the wage fund after 1903, as they were in 
the years 1897 to 1903. the rise in wages would have 
been very rapid, because all the labor was then called 
to work and competition among laborers to obtain work 
was changing to competition among employers to obtain 
men. 

Altho the level of land values in 1897 established a 
fixed limit beyond which wages and profits could not be 
safely invested this limit was now ready for a wide ad- 
vance, which was to give landowners eight or ten billion 
dollars of an increase in company with the advance in 
other prices. The low prices of 1897 followed the panic 
of 1893, the weak property holders were sold out, their 
lands and lots were foreclosed and this caused a fall 
from the high prices for land in 1893, the public was 
sick from investments in land. When profits accumu- 
lated in 1897 they had no other outlet except to employ 
labor and return to the channels of trade. Owing to 
the fact that there was no market for real estate at that 
time there was a plethora of money, because the sums 
before used in the land market were idle and were seek- 
ing to employ labor. 

As new profits were used to increase the employ- 
ment of labor there was an advance of industry over 
the fields that before had to be abandoned on account 
of falling prices. Higher prices can only be propagated 



58 DISTRIBUTION. 

through the payment of profits in new wages. Hence 
land had no power to advance until the advance had 
been general over the entire field, and until the higher 
prices for goods required capital and labor to bid higher 
prices for land. When all building material had thus 
advanced and profits were rapidly increasing there was 
a rush to extend business so as to gather in the excep- 
tional high profits. 

Land remaining stationary in price while other 
prices were advancing soon began to attract attention 
as offering a good investment. During this season of 
prosperity a new demand for buildings of all kinds 
arose, the old buildings on cheaper lands were command- 
ing higher rents and were selling for higher prices. If 
land failed to advance there was a large margin of 
profit in lots on which to build to supply the demand for 
more buildings. It is necessary that buildings sell for 
higher prices if wages are to advance to new levels, 
because the price of a building limits the wages we may 
pay to labor for doing the work. But when capital seeks 
to get land for building or for mining or to cultivate, 
he must bid for the land, and in so doing he is forced 
to pay all the gain to landowners by paying higher 
prices for land. 

The rise in the price of all commodities and the 
great increase in the quantity sold gave enormous pro- 
fits which had no field open to employ more labor after 
1903, and were invested in land, or in stocks and bonds. 
The change in the current of demand from the labor to 
the land market set the brakes on the car of progress. 
This is only another method of saying that the distribu- 
tion of profits taken from the enormous volume of busi- 
ness ceased, and the accumulation and congestion of 



THE PART PRICES PLAY. 59 

bank deposits was to take their place. Altho wages had 
increased from twenty-five million dollars a day in 1897 
to fifty million dollars a day in 1903, there was no 
increased distribution of wealth to labor because the 
increase in wages was largely an increase in number of 
men and of hours of work, and was not increase in the 
wages to each laborer. It is true there was a twenty 
per cent, general increase in the rate but it was more 
than offset by the forty per cent, advance in prices, and 
wages were farther reduced by the advance in rents fol- 
lowing the year 1901. 

When the general advance in the market is checked 
by a rise in the price of land, and when the daily profits 
of business fail to be redistributed, they will pile up as 
idle bank deposits seeking investment. However the 
individual depositor may invest his gains they are not 
distributed, but remain as undigested bank deposits con- 
centrating to fewer individuals who understand the 
game. These deposits may be used over and over again 
to bid up prices of securities of all kinds, and to bid up 
prices of land until the limit of expansion is reached, 
when the bubble will burst with a panic. 

During a period of higher prices for bonds 
and stocks and lands the important change that is 
taking place in banking is the change from a deposit 
payable on demand to a debt payable in the future. The 
wise investor having experience knows that a collapse 
is inevitable, hence, he seeks what he calls a safe invest- 
ment and safety is only to be secured by changing the 
character of the credit he holds against labor. It is as 
certain as fate that ten million dollars profit each day 
failing to be distributed cannot continue to accumulate 
and be redeemed on demand because the power to re- 



60 DISTPJBUTION. 

deem is already fixed at the prevailing wage limit. It 
follows, therefore, that a point is soon to be reached 
where a collapse must follow, and the men who have 
succeeded in changing demand credits into long time 
debts well secured, are able to escape the storm. 

When you read statistics of the growing billions of 
bank deposits in prosperous times you will also read that 
the bank loans these deposits above the required reserve 
as rapidly as they accumulate. The money accumulating 
from the great volume of business following 1902 which 
could not be distributed must soon begin to clog the 
market as it grows greater day by day without an outlet 
except to expand the bubble of speculation and of wild 
extravagance. When money is merely taken from a 
bank by one man to buy property it is returned again 
by the man selling, but when the deposits grow beyond 
measure and reason, when billions of dollars worth of 
new land value is added to billions of undigested de- 
posits the banks become top heavy, and we are riding 
prosperity for a fall. 

Deposits can only be redeemed in one way and that 
way is to pay them off with money and they cannot be 
|)aid faster than the money which has been loaned can 
be returned. The growth of deposits in normal times 
requires but one dollar of money, held as a reserve, for 
every ten dollars held as a deposit, and this is easily 
accomplished while deposits are increasing. When a 
banker is taking in more money over his counter each 
day than he pays out he accumulates cash which he 
reduces by loaning money. But the situation changes 
very rapidly when the banker is called upon to pay out 
more money each day than he takes in and must call in 
his loans. And this situation occurs when the market 
reaches its highest prices and turns backward. 



THE PART PRICES PLAY. 61 

Money comes into the bank rapidly because prices 
are rising, but when prices stop rising the tide will stand 
still, and when prices turn and begin to fall then the 
same elements that swelled deposits will operate to con- 
tract them. We then find we are hemmed by walls of 
land value which will not shrink or release their debt. 
The billions of deposits payable on demand in cash are 
loaned out and the bank depends upon calling in these 
loans to keep enough money on hand to meet its de- 
mands. But the borrower who w^as making a profit 
when prices were rising is as surely making a loss when 
prices are falling and altho a man may be willing to 
sacrifice he cannot find the money with which to pay. 
It is not difiicult to understand the present stringency of 
money, for at this time, January 1907, the deposits in 
all our financial institutions aggregate fifteen billion dol- 
lars and require one-half the total supply of money to 
be held as a reserve upon a basis of but one dollar in 
cash for each ten dollars of demand liability. 

Money outside the bank vaults with which to pay 
becomes very scarce and will become more so as de- 
posits are drawn down, as each bank in seeking to pro- 
tect itself contracts the currency by trying to keep all 
the money it gets to strengthen its reserve. The crash 
comes when the top heavy structure must fall because 
loans cannot be paid and depositors demand money 
which the debtor has no method of getting. 

}|« :j« :jj si« Ht 

Development spreading in all directions during sea- 
sons of prosperity pushes out into more and more haz- 
ardous schemes as the volume of gains increase. We 
build upon the thinnest ice around the longest diameter 
on the outside of every business. In every city and vil- 



62 DISTRIBUTION. 

lage you will find residences, business blocks and office 
buildings pushing ahead of any possible margin of 
profit unless the good seasons continue. The industrious 
builder is well aware of this fact, but hopes to sell out 
and allow another to suffer the inevitable loss. As it is 
with the more permanent structures so is it also in other 
business lines, from department stores in the center of 
a city to the Delicatessen in the suburbs there is a wide 
expansion of the bubble of prosperity. 

When prices fall and trade diminishes these thou- 
sands of incipient enterprises go down and carry others 
with them. Laborers in large numbers are thrown out 
of work and general demoralization takes place. In all 
the literature of prices, including Dun's index, the price 
of land is never taken into account, and one must be 
amazed at the blindness which calculates the effects of 
prices and overlooks the price of land. It is the rise and 
fall in the price of land that is responsible not only for 
the rises and declines in the general market, but is also 
responsible for other wide changes that have never been 
explained. 

In our present season of prosperity, for example, 
we have two conspicuous examples of very high prices 
out of all relation to the general rise; namely, Pig Iron 
and Copper. 

To simplify matters we need but to state that there 
is a natural price for everything to which price belongs, 
this natural price is as high as the laws of nature will 
permit, no combination of capital and no organization 
of labor can prevail against this law and get a penny 
more than the natural price. Price is merely a statement 
of the equal relations of natural forces of distribution. 
The total purchase power bids for the total supply and 



THE PART PRICES PLAY. 63 

makes the total price and this is the highest possible 
price. We cannot have prices above this level because 
our civilization has not advanced beyond its own plane, 
but since we come from naked savages who roamed the 
plains and forests, we may return to naked savages 
again. So, therefore, we may have prices below the 
normal but never above it and all the decline below the 
true level is an indication that the savage existence is 
being forced upon unwilling citizens by taking their 
purchase power away from them and by investing it in 
debts for which they are held as slaves to pay. The 
most cursory examination will prove that the monopoly 
price is the only just price for all concerned, and brings 
about the widest possible economy of forces. 

What we call competition should now have another 
name and be known as the social disease of the unem- 
ployed; monopoly should be given the name selected by 
Herbert Spencer, and be called relative competition. If 
land could not be bought and sold and if ground rent 
was taken for taxation, the entire organization of capi- 
tal to obtain higher prices and of labor to obtain higher 
wages would be useless. 

But when large volumes of purchase power are be- 
ing taken from the market by property in land a rea- 
sonable self defense will require capitalists and laborers 
to organize to prevent it. This organization of capital 
and labor to resist a loss makes the unorganized classes 
so much weaker and the concentration of wealth so much 
more rapid. The way out is not to return to barbarism 
by trying to enforce a warfare of competition, but to 
lift all prices to the natural monopoly level by stopping 
all interference. 



64 DISTRIBUTION. 

When we have succeeded in doing away with the 
price of land and have removed this pressure from the 
market all prices will rise to the natural level and there 
will be no unfair advantage in great organizations of 
capital. Organizations of capital and labor have now 
an advantage because of the difference in levels between 
monopoly and competitive prices. We can wipe out this 
difference just as effectually by moving to the upper level 
of monopoly as we could if it were possible to pull enter- 
prise down to the lower level of competition. 



The Riddle of the Sphinx. 



CHAPTER SIX. 

IT HAS ever been a great mystery to many students 
as to what becomes of the power of modern machin- 
ery, because there is a great volume of energy lost 
in some strange manner. Modern labor has its power 
increased many times ; the farmer today has eight hun- 
dred times the power of the Middle Ages cultivator and 
in other lines there has been a similar gain. On this ac- 
count men have dreamed of a world devoid of all 
poverty and filled with peace and plenty. The mass of 
laborers, however, are but slightly better provided than 
the men of the Middle Ages and they Avork more hours 
continuously than men ever worked before. 

Our machinery produces other machines, we build 
railways and produce great quantities of goods but there 
is somewhere a tremendous loss and a tremendous dis- 
appointment because the mass of the people are not re- 
lieved to any considerable extent from poverty, anxiety 
and crime. In fact, this contrast and this failure of 
modern society to benefit each of us as we feel we should 
be benefited is responsible for a great increase in vice, 
crime, insanity and suicide. The hopeless classes grow, 
our new methods make them hopeless and dependent 
and for some mysterious reason there is a remarkable 
failure in benefits. This failure is one of distribution. 
But when we consider the material things of our world 
we find they are being consumed by the people, that 



QQ DISTRIBUTION. 

machinery has enormously increased the total of con- 
sumable goods and that these same goods are enjoyed 
by the mass of the people. 

We turn to fixed property and although we find it 
concentrating to a few owners yet the owners are so 
limited by natural laws and the property is so governed 
that it must work for the benefit of the masses or not 
work at all. Thus, while railways, telephones and tele- 
graphs, factories and buildings are becoming the prop- 
erty of but a few men, we, also, realize that in so much 
as these same properties are put to use they must become 
a benefit to mankind at large. Again we face the riddle 
of the Sphinx as we admit these facts on one side and as 
we know there is a great loss going on continually which 
we seek to uncover on the other side. 

This machinery is all at work in prosperous times, 
but its product in some strange way fails to balance. We 
have fifty men of machinery to assist each human work- 
man and we realize there is somewhere a great loss be- 
cause this machinery at work fails to register over one- 
half of its benefits. Is it possible this machinery produces 
credits on paper instead of tangible results, that these 
credits pile up in prosperous times, making higher prices 
for land, and great volumes of new debts which the suc- 
ceeding panic wipes out, and that after a panic this 
beneficent machinery is set to work again producing 
more credits and debts and is only allowed to produce 
enough goods and tangible property to float credits and 
to pay interest on debts and supply human subsistence? 
If this is the true status of the case we get a solution of 
our riddle, we see men run the machinery of production 
wholly in the interest of bank accounts, we see this ma- 
chinery is turned to earning money which is allowed to 



THE RIDDLE OF THE SPHINX. 67 

pile up in banks until the inequality of purchasing power 
causes a panic and the top-heavy credits are wiped out 
and then we begin the same crazy and idiotic proceeding 
over again. 

According to the laws of distribution the machinery 
of production must use money first, must first create a 
purchasing power to be distributed so the people may 
buy the goods and property created. 

It is not the intention of the law to produce pur- 
chasing power in the form of credits merely to pile them 
up, such a process must defeat itself, and no more credits 
can be used than can be redeemed by the money paid 
out in wages. In any prosperous season we will produce 
a net undistributed surplus fund of about ten million 
dollars a day, this fund becomes a bank account and is 
used to buy land or buy other debts. Since property in 
land is not subject to continual production and consump- 
tion like coal it cannot yield up its purchasing power nor 
can buying land distribute any of this purchase power 
to labor. 

Every season of general prosperity follows a rise in 
prices of commodities because higher prices promote a 
wider diffusion of wealth. Every season of adversity is 
brought about by falling prices or commodities and indi- 
cates a failure in distributing the gains of the preceding 
prosperity — thus compelling a new division of property 
among owners when those who are strong financially 
gain the property of the weak. This condition does not 
indicate the survival of the fittest, which could only be 
determined in a fair field with no favors, but indicates 
a failure in our general system by which wealth con- 
centrates when it should be diffused. 



68 DISTRIBUTION. 

Under such conditions, and under such a system, 
the advantage is on the side of the cunning, of chicanery 
and graft, as it is in every age of tyranny and oppression. 

To enable the reader to understand distribution as 
a science separate and distinct from production he must 
first understand that prices of all kinds are the particu- 
lar province of the laws of distribution. When a season 
of general prosperity is being ushered in by a tide of 
rising prices we see the effect of a more generous distri- 
bution of new w^ealth. To see this machinery of dis- 
tribution in its broad lines wc must see how money cir- 
culates to pay wages, for it is by the circulation of money 
that wealth has its beginning and starts distributing. A 
given circulation of money establishes a given level of 
wages and whether it be in America, China or Japan, 
the principles of distribution are identical and the laws 
by which the level changes are universal. 

To get this matter clearly in mind the reader must 
separate primary from secondary distribution. Wealth 
is primarily distributed as wages and growing out of 
these wages as they are spent profits will arise and will 
furnish a fund for secondary distribution. Wages, for 
example, may continue at a relatively fixed sum for a 
number of years and this wage fund will determine the 
volume of money for primary distribution. And with- 
out any apparent disturbance in this labor market there 
may be going on a very great and very unequal concen- 
tration of wealth from secondary distribution, because 
the profits taken daily from wages fail to return to cir- 
culation. 

Labor may thus be paid the ruling wages with full 
employment, and may be producing enormous totals of 
fixed property in addition to the goods consumed, yet 



THE RIDDLE OF THE SPHINX. 69 

wealth will concentrate ^•erv unequally because the valu- 
able income bearing property is unjustly distributed to 
a few men outside the ranks of labor. 

Our enormous power of machinery and labor cre- 
ates a growing surplus, which allows billions of dollars 
to be taken away from the general market while we 
work on, unconscious and undisturbed. 

It is on account of our facility in making debts that 
we may thus continue to work while distribution is un- 
equal, the time of payment is set ahead and the sums 
intended to increase wages are used to buy a debt and 
put a perpetual service upon labor. 

The financial legerdemain by which the credits pro- 
duced by labor have been turned to debts against him 
arises from our failure to adjust distribution to new 
development. The increase of machinery, of railways 
and factories changes the time between production and 
distribution; much of our work now requires great ser- 
vices from labor for which complete payment is deferred. 
This time arising between rendering a service and its 
ultimate payment is bridged over by credit which is sup- 
plied by the volume of money. 

When we consider so simple an example as the 
production of shoes, we find credit from labor starting 
with the cattle on the plains, going over railroads to 
packing houses in the cities and then to tanneries and 
leather companies, to manufacturer and merchant and 
finally to consumer. The shoes selling to the consumer 
pay the accumulated bills and the money must go back 
to each one who in any way helped in this shoe industry. 
This complete process occupies considerable time for one 
circuit and we cannot wait for one circuit to be complete 
before we begin another, and so the capital to pay this 



70 DISTRIBUTION. 

expense for one day must be increased in amount accord- 
ing to the number of days required for a regular circuit 
of receipts and expenses to balance. By paying as we 
go instead of waiting, we use the money much more 
economically by using it over and over again. The 
money paid out all along the line is put back into circu- 
lation by banks and thus the money paid for labor, 
where shoe making begins, gets back and is ready to 
buy from the retailer and even up the demand and 
supply. 

This example will show how modern industry re- 
quires large sums of money and credit depending upon 
the daily wage rate. Our roundabout methods of pro- 
duction and distribution require time, and we must have 
a volume of money sufficient to pay wages at the stan- 
dard rates for as many days as may be required to com- 
plete the circuit. For example we now pay in round 
numbers fifty million dollars a day in wages and if 
twenty days are necessary and we pay cash it would re- 
quire one thousand million dollars of our circulation in 
the labor market alone. In addition to the labor market 
we have the market for fixed property, the value of which 
is nearly one hundred billion dollars, and this property 
is in constant process of distribution, either spreading 
among more owners- or concentrating to fewer owners. 

This property market will consume or take up, a 
volume of currency in proportion to the sums involved 
in this trade, which is to say that the entire circulation 
of a country will divide into its channels and that prices 
will be made according to this volume of money in circu- 
lation. The introduction of railways and great factories 
had the effect of widening the paths between demand 
and supply. It is quite simple and easy to understand 



THE RIDDLE OF THE SPHINX. 71 

that when laborers are only producing simple goods they 
buy and sell to, and from, each other, but now they buy 
and sell in the market. Wages in the hands of labor is 
the shuttle in the loom passing forward and back weav- 
ing a complete fabric and the variety of occupations and 
variety of products do not change this principle. 

This continued action of production and distribution 
is called supply and demand and when we look upon 
simple laborers trading products with each other, it is 
easy to tell how the failure of one to buy prevents the 
other from selling. But when w^e introduce entirely new 
classes of products like great engines and steam boilers, 
trip hammers, railways, telephone systems, and the like, 
we change the paths between demand and supply and 
require more time between production and distribution, 
this change in time gives rise to difficulties in distri- 
bution. 

Our great trip hammers, steam boilers, railways and 
industries of all kinds are a part of the daily product of 
labor and must become a part of daily distribution also, 
if we are ever to secure justice and equality. The total 
effect of labor at work each day must be valued and be 
distributed so as to pay them and become a cause for 
their work the next day. Our great failure in distribu- 
tion arises on this account because the mass of laborers 
get no share of any kind in the distribution of the fixed 
and income property of the country. 

Billions of dollars fail to return to the wage fund 
where laborers may get this money with which to buy 
their share of wealth and these billions that lodge and 
clog the markets are borrowed and thus used to convey 
ownership to the men who deal in debts. 



72 DISTRIBUTION. 

When a man builds a house he cannot do so him- 
self in one day and as a result he must get credit for 
all the extra days work of building the house over the 
one day or few da3^s he himself might engage in it. 

Although the man pays money for the house as the 
work is being done the money so paid out is merely a 
credit extended by society for the purpose of increasing 
our social activity. 

Before the house can be finally equalized in distri- 
bution all such credits must have traveled around many 
circles so as to equalize service among laborers. 

To make this matter clear to the reader we will 
take an ordinary building and loan society as first organ- 
ized in this country. 

A hundred men for example, desire houses of a hun- 
dred different varieties, having a hundred different ca- 
pacities to pay for them. Confining our illustration to 
this one hundred men they must depend upon their sur- 
plus earnings to establish a credit fund with which to 
build, and the old practice was to offer this credit fund to 
the highest bidder for the money with which to build 
the first house. 

Now manifestly the problem of distribution would 
be plain, as the first man to build must continue to pay 
to the others until all his debt has been paid, at which 
time the last man will have acquired a house for con- 
siderably less than its cost. 

The circle of distribution and the time required to 
balance all the credits in this example is not difficult to 
calculate. Each man in his turn will not only be re- 
quired to earn his own house by his own labor but he 
will also pay for the advantage in time, pay for getting 
a house before others by paying the interest upon the 
loan. 



THE RIDDLE OF THE SPHINX. 73 

This is a good example of a just and natural dis- 
tribution of wealth in a small association of house 
builders. 

But suppose instead of securing houses in this com- 
mon way of earning them a hundred men organize a 
wild cat oil company and sell enough bogus stock to 
build their houses and pay for them. 

The reader will readily admit that this is simply 
a legal way of robbing unsuspecting people of their sav- 
ings and will have no difficulty in tracing the source of 
such an unequal distribution of wealth. 

But to carry the example a step farther, suppose 
this association of one hundred men buys a plot of land, 
divides it into lots and sell the lots for enough profit to 
pay for a house for each. 

In such a case the tedious process of earning the 
house and of waiting, and of paying interest is dispensed 
with. But can houses be built and be thus given away 
unless some one earns the money and pays the principal 
and interest while other men wait? 

When the hundred men sell lots for money they 
acquire the credit to build houses from the sale of lots, 
which otherwise they must earn. 

This credit they change into a debt in the value of 
the lots they sell, but it is a different debt than the one 
men contract who borrow directly from each other and 
wdio must return the money so borrowed or surrender 
the house to the association. 

The value of the land becomes a fixed and perma- 
nent debt upon the total earning power of all laborers, 
which can never be paid but which can be exchanged in 
the real estate market for money by merely selling the 
land to a man who wants to buv such a debt. 



74 DISTRIBUTION. 

The inequality of distribution in such case is much 
more difficult to locate because no particular man owes 
the debt to another particular man, but only the poor, 
the downtrodden and defenseless are thus chained to 
slavery by debts other men contract for their own bene- 
fit and for which the poor are reduced to slavery. 

Capitalists are supposed to furnish the money with 
which our great enterprises are carried on, but capital- 
ists cannot furnish a dollar unless they are also laborers 
and then only so much as they may earn. 

Capitalists sell securities and thus secure the floating 
and idle purchasing power, and they invest it for its 
owners but retain more than half of the total for them- 
selves. In order that a railway or factory may get into 
the channels of distribution it must be valued on the 
basis of other values and it should be sold directly to 
purchasers as commodities are sold. It is supposed that 
railways are built from the savings of the people, that 
there is a direct connection between the production and 
distribution of them and that the debts are evidence of 
ownership among workmen. 

But we do not build railways in such manner and 
could not because workm.en are not paid enough to buy 
them after they build them. The prosperous seasons for 
building always follow fast upon hard times when peo- 
ple have had no opportunity to save, our building periods 
are short and brilliant. When we are having a pros- 
perous season we spend billions of dollars that come 
from the difference between rising prices and stationary 
wages. We do a normal business of twenty billion dol- 
lars a year in dull times and when prices rise a few men 
take off this increase as a profit. 

Thus starting with a business of twenty billion dol- 
lars a year a ten per cent, increase will scatter a bonus 



THE RIDDLE OF THE SPHINX. 75 

of two billion dollars and this is not distributed to the 
people so they may buy or build homes but becomes idle 
capital in the hands of the people who have no use for 
the money and who seek to invest it. 

These extra billions get into the channel of trade 
by being loaned, but even in so doing they expand the 
growing volume of business from twenty to thirty billion 
dollars and because wages remain practically stationary 
there w'ill be a growling profit accumulate of from three 
to five billion dollars each year. These billions must 
seek investment and they can do so only by buying 
property or by being loaned. If the property so bought 
is of a kind produced by labor there could be no accumu- 
lation of idle money because every dollar of profit rein- 
vested in the services of labor becomes a part of the wage 
fund and is broken up and distributed. The owners of 
such accumulations do not need the services of labor at 
the time but want future service and in order to get it 
they buy bonds or property in land whose value keeps 
increasing. 

The price of land is now more than fifty billions of 
dollars and represents a purchase powxr earned by labor 
but turned into a debt against him and because of this 
debt his wages are held down and the gains in wealth 
are taken from him and are being continually added to 
the principal of the debt. Land commands a price in the 
general market only as it gives its owner the power to 
take a share of the daily earnings of labor, as the owner 
may interfere with distribution. The owner refuses to 
allow men to dig unless they pay a royalty to be taken 
from the price of the product, or he has a location 
w^herein he can take all time saved as rent for the use 
of his land. 



76 DISTRIBUTION. 

On account of this A'ariation in the amount any 
single owner may take, the selHng price of land will vary 
greatly being but a few cents an acre for wild mountain 
land and twenty million dollars an acre in New York 
City. Bear in mind that property in land is not an evil 
on account of the sums it takes from labor as rent, but 
its evil is measured by its selling price which represents 
the amount of purchasing power that fails to be dis- 
tributed and which should have become a part of the 
wage fund. 

The reason the price of land introduces a new sys- 
tem of slavery is because the market for land absorbs 
the money that should go to labor as his share of the 
advances made by civilization. This property offers an 
investment for all these accumulations and by so doing 
it fixes a limit to the sums distributed to labor as wages 
and a limit to the sums distributed as capital. It is this 
power to drain away all the purchasing power from la- 
bor except enough to enable him to live and to pay inter- 
est, taxes, and rents that establishes slavery among 
them. 

The essence of slavery is not found in owning a 
man and in flogging him to worl^ for you, but in own- 
ing him so that all his gains above his living will be 
yours. And when a system will enable the owner to 
enslave men unconsciously and can fasten all manner of 
taxes and other charges upon the shoulders of such of 
the slaves as are yet earning a decent living, we have a 
system of fiendish and refined torture. A system where 
men are driven by the fear of poverty, by the lash of 
public opinion, and the scorn of their own family and 
friends as they see the deep gulfs of misery under their 
feet. 



The Part Money Plays m Distribution. 



CHAPTER SEVEN. 

PICTURE the millions of tons of coal and iron and 
other metals and minerals and the tremendous 
totals of farm products all in process of moving 
to their respective places to be consumed. And again 
picture that as each ton or bushel moves along a square 
on this checker board, another ton or bushel pushes into 
the vacant place. In consumable goods alone we have a 
vast total of property ever on the wing, and labor must 
furnish this supply as a credit so as to carry on our 
modern system of production and distribution. 

Consider again that labor must be paid subsistence 
every day and that these credits are gains above sub- 
sistence which he has not received as wages and for the 
benefit of which he pays a profit. Consider again that 
this moving volume of credit establishes thousands of 
paths where the ends meet and where each credit is being 
continually redeemed in the retail market by the con- 
sumers. In addition to this moving volume of consum- 
ers' goods of every description there is also a tremendous 
amount of fixed property in buildings, railways and 
machinery to assist this process which is also a credit 
advanced by labor over and above subsistence. 

This wealth is all in process of being consumed and 
its time of life varies greatly and it must all be paid for 
in money. The reason we have money in society is be- 
cause labor must advance credits which cannot be paid 



78 DISTRIBUTION. 

directly and at once, but must be paid indirectly and by 
many redistributions. We must have a volume of money 
great enough to carry these credits, and to enable us to 
pay labor from the beginning of a product through all 
its wanderings until it is sold to the consumer and thus 
balances the account. And moreover the volume of 
money must be large enough to sustain this credit for 
as many days as it takes the entire volume to make a 
complete circuit so the money may be used over again. 
We require a volume of money sufficient to pick up 
and carry all the labor credits represented by goods mov- 
ing to markets to be consumed and we need an additional 
volume to carry the credits required to build railroads 
and other property until the ownership in them is set- 
tled and distributed. Although we thus need a consid- 
erable volume of money yet these same needs are abso- 
lutely limited, and to issue more money than we need 
becomes an intereference. Money must be valuable be- 
fore it is useful, its value must be more stable than any 
other value and it must renew its value at its source con- 
tinually. We are thus limited in the volume of money 
and credit by its necessary return to labor to be redeemed 
by a given time at work. This fixity in the volume of 
money gives rise to the secondary money of banks as 
a more flexible medium of credit, a more liquid currency 
that comes and goes in greater volume and is issued and 
redeemed without interfering with the value of primary 
money, but which must be redeemed in primary money 
on demand in order to be valuable. Prices are made by 
the volume of primary money that is paid out every day 
in wages because this payment measures the purchasing 
power which determines all prices. The price of fixed 
property is maintained by a volume of money that circu- 



THE PART MONEY PLAYS IN DISTRIBUTION. 79 

lates for the purpose of exchanging and distributing this 
kind of property, but all such prices must conform to the 
basis established by a day's pay for labor. 

It is the spending of wages that makes prices, and 
you cannot have a lower price and the same spending 
volume at one and the same time, this is to say there 
can not be low prices for goods and high wages at the 
same time. When we now pay fifty million dollars a 
day in wages we do so only because fifty million dollars 
a day is being spent for goods. This does not mean that 
every laborer spends all the money that he receives each 
day, but he may save a larger part of it provided the 
same sum is put into the market by new construction at 
other places. 

When ten million dollars accumulate each day as 
profit from a business of fifty million dollars a day this 
profit is received as so many dollars in money, and if 
this money was held out of circulation business would 
soon come to grief, therefore we have developed banking. 

With ten million dollars of credit accumulating in 
banks each day it soon becomes an alarming sum which 
must be distributed by a secondary process if the primary 
process of working every day is to continue. This sum 
of millions failing to advance wages as prices of goods 
advance will not remain idle money but will seek some 
outlet so as to secure some share of profits. To get into 
the channels of profit sharing surplus money must com- 
pete with other industries and thus increase the hazard of 
business and greatly reduce profits by dividing the gains 
among competing companies, or it must buy land at in- 
creasing prices. This sum of ten million dollars a day 
surplus will grow to a billion in a hundred days and to 
three billion in a year. 



80 DISTRIBUTION. 

To enter into competition is to begin a war of de- 
struction, to stop accumulating profits, to reduce prices 
over the entire market and to force wages to the lowest 
point of subsistence. The problem of preventing this 
competition resolved itself into one of unequal distribu- 
tion by dividing the surplus into interest and principal 
for new debts and selling securities to take up and con- 
centrate the growing wealth. If industries can be so 
controlled that this idle money cannot compete and be 
wasted by a needless duplication of plants, securities may 
then be issued bearing a small part of this surplus profit 
as interest and by selling securities to the owners of idle 
capital the credit provided by laborers to carry on mod- 
ern business is changed into a debt to enslave them. Bus- 
iness is subject to risks and changes from new inventions 
and therefore requires a high rate of profit to become 
successful. Men who own idle money which they secure 
from advancing prices are willing to invest this easy 
money at a low rate to insure its safety. 

For this reason, among others, the men who have 
special knowledge and experience are able to secure 
enormous wealth by a mere issuance of paper securities 
which they sell to idle capital seeking any return it may 
get. This idle surplus seeking a safe investment leads to 
the problem of security and to have us inquire upon what 
security investments are based. Is the security of capi- 
tal furnished by the fixed property now worth a hundred 
billion dollars, or does it depend upon the fifty million 
of dollars circulating each day as wages? Manifestly 
the security depends upon the certainty with which inter- 
est will be paid because this alone will establish a market 
for the principal. Thus we are forced again to return 
to the primary source of all purchasing power, to the 
sum of daily wages out of which profits are derived. 



THE PART MONEY PLAYS IN DISTRIBUTION. 81 

Bear in mind that when this daily profit cannot get 
into its proper channel and increase wages it must ex- 
pend itself in competing against a limit in wages. This 
competing surplus growing in volume w^ithout limit must 
finally meet the limit of wages and cause a wide disturb- 
ance in credits. 

Idle money seeking investment can have but one 
effect which is to bid up the price of property command- 
ing an annual income or rent such as bonds and stocks 
and lands. Thus when business must pay twelve dollars 
a year income on each hundred dollars of capital, idle 
money will bid up a gx)vernment bond to six hundred 
dollars in order to secure twelve dollars a year income. 

Consider how this selling of securities will effect the 
distribution of wealth and how it will concentrate owner- 
ship to the men who accept all idle money and only return 
a small share of profits to investors. We now have an 
annual gain of about three billion dollars in surplus 
which on a tw'enty-four per cent, basis of earnings is 
paid as extra dividends on property costing but twelve 
billion dollars. The competition to share in dividends is 
so great that six dollars a year income will sell at one 
hundred dollars. One-third of our annual surplus or 
one billion dollars a year if it was set aside to pay six 
per cent, interest on new bonds would allow an aggre- 
gate of more than sixteen billion dollars to be issued 
and capitalists need only wait on the surplus to accumu- 
late to give them a market for these bonds and then they 
may buy billions of dollars worth of other property with 
this money. 

It may seem that frenzied finance is a dream, that 
to capitalize property costing twelve billions by an in- 
crease of sixteen billion and retain the original property 



82 DISTRIBUTION. 

is absurd. But we can point to a single class of property 
that cost not one cent and now commands about one- 
third the free profits of business and which sells at a mar- 
ket price of not less than fifty billion dollars, property 
in lands, lots and mines, and this value is exclusive of 
all improvements. Under present conditions labor can 
never redeem this land value debt because as one land 
owner may sell for money with which to employ labor 
he must sell to a man who has taken the money from the 
market and as he buys land he again invests it as a debt 
upon labor. 

The price of land is a marked exception to other 
prices because men cannot thus bid up the price of coal 
and corn and cotton without the money going into 
wages. To bid up the price of wheat for example means 
that labor has wheat to sell and thus shares at once in 
the distribution and furthermore the wheat will be con- 
sumed daily and labor will bring on continued supplies 
and keep getting his share of the profits. But land and 
bonds are an exception to this rule as they are not con- 
sumed and are not in the hands of labor representing 
some service, but only represent the power of taxation, 
of taking a share of profits and of selling the right to 
tax labor to the highest bidder. 

In bidding for land there is no competition among 
owners to sell as there is among owners of wheat anxious 
to secure the highest prices, but greed operates to make 
land scarce in the market as soon as the price advances 
because owners hold for a hig*her price instead of selling. 
As a result of this union among owners of land advanc- 
ing the price, population will scatter over a territory 
three times as great as their industry and activity re- 
quires, or they will concentrate into narrow circles in 



THE PART MONEY PLAYS IN DISTRIBUTION. 83 

cities where the center allows the greatest saving in 
time and the greatest economy in the use of land and in 
payment of rent. 

Land is the fundamental source of every concrete 
product upon which we depend, and all the labor engaged 
in growing or transporting or trading must have direct 
access and undisturbed possession of the land required. 
We are, therefore, compelled to pay the owners to keep 
them from excluding us from the earth so we may serve 
each other and distribute our services. Land, when con- 
sidered as land, can have no value or purchase power of 
its own, in the way that money has its purchase power, 
land is barren of any service on account of inherent fer- 
tility or inherent supplies of metals or minerals. Coal 
for example can have no purchase power until after it 
is mined and is able to perform a service and its price 
will depend upon the service it may give. It is on 
account of this value of land that we get the gulf be- 
tween the rich and the poor, and of our failure to prop- 
erly distribute the gifts and blessings provided by a wise 
and benevolent God. 



Interference witn Distribution. 



CHAPTER EIGHT. 

BY PROPERTY in land a method has been dis- 
covered to change credits payable on demand into 
irredeemable debts by changing the time from pay- 
ing on demand to paying in the distant and uncertain 
future. We are required to provide a store of goods, of 
buildings and supplies and of machinery to carry for- 
ward our modern system and it is necessary to pay large 
profits and encourage men to save for this purpose. 

But, beyond this purpose saving has no power to 
increase the general wealth, when this credit has been 
provided and when we continue to pile up billions of 
dollars instead of consuming them in a better living we 
are piling up trouble for ourselves and our followers. 
We cannot keep on creating vast totals of credits in 
banks and get no return in distribution while the stan- 
dard of living becomes more difficult and expensive from 
day to day. Labor is paid for a day's time consumed by 
work, this payment must be used as a purchasing power 
so as to be set free and pay for more work. This action 
and reaction of production and distribution, of supply 
and demand, is governed by a natural law illustrated all 
around us and most familiar in our rainfall. 

The production of rain and snow must equal evapo- 
ration and the fall of rain must exactly balance the evap- 
oration. Each drop of water or crystal of snow is not 
expected to return to the same place from where it was 



INTERFERENCE WITH DISTRIBUTION. 85 

taken because the air has a storage cai^acity for vapor 
and clouds. If there was not an exact balance between 
rainfall and evaporation the world would become devoid 
of life and would lose its atmosphere and its water. To 
illustrate the same principle, we breathe in oxygen gas 
and give out carbonic acid gas and we would all die from 
suffocation unless the plant life exactly reversed this 
process by taking up the carbonic acid gas and restoring 
the oxygen to the air. 

When we fail to balance production by distribution 
we interfere with this natural law. When we pile our 
surplus energy into clouds of debt we call down the 
storm upon our unprotected heads, and we vitiate the 
atmosphere of society and suffocate from vice and de- 
generation. The credit labor is required to furnish 
arises from the profits secured from the advances made 
by civilization. This profit coming from the outside and 
being an addition to the prevailing levels of distribution 
will recjuire secondary distribution to raise the level of 
wages so as to consume this new volume of purchasing 
power. 

This secondary distribution is a very simple matter 
and nothing more is required from us than to spend 
these profits for labor in any direction that pleases us, 
and although profits may seem abnormal yet by spending 
them for labor we put them back into circulation and 
bring back the true level again. To have machinery and 
other improvements throw increasing purchasing powers 
upon the market and then to fail in distributing them is 
the cause of oin* social inequality. There is only one 
way in wdiich the owners of these vast acctimulations 
may prevent labor from getting a share and that way is 
to change credits into debts by changing the time of re- 



86 DISTRIBUTION. 

deeming money from present payment on demand to a 
payment in the distant future. 

If we create a system whereby our deferred pay- 
ments become permanent debts, we will need a market 
wherein one man may sell and change his debt into a 
credit and where the man who buys changes his credit 
into a debt. When these deferred payments are thus 
being bought and sold, we must not get confused into 
believing that property is being bought and sold unless 
we are willing to make property of our own kith and kin 
and of our flesh. What is being bartered is human life, 
present and prospective, the men now living and the men 
who are expected to follow and to continue to work for 
their owners. We sell the right to take from labor all 
the gains of modern civilization that exist now and that 
may arise in the future. We sell the right to take away 
everything but a mere existence and leave labor almost 
naked and wholly defenseless. Be not deceived when 
you are told that capitalists furnish valuable aids to la- 
bor by supplying money, machinery and raw material 
for such is not the case. All these blessings are furnished 
free by nature and by the laws of evolution. 

The men who own land values and who barter them 
have no claim of any kind worthy a moment's consider- 
ation from any honest man. The principal market in 
Avhich we offer our human slaves upon the block is the 
real estate market, the prices we pay for land measures 
the slave value of American workmen who are now 
worth more than fifty billion dollars to their owners. 
And the money with which slaves are bought and sold 
is the money they create daily, it is not the money saved 
from the past, but their own hands are made to forge 
the chains of slavery to their own ankles which lengthen 



INTERFERENCE WITH DISTRIBUTION. 87 

as they are driven forward and grow heavier as they 
drag after them. 

No man may go to nature's manufacturing estab- 
Hshment and supply himself according to his needs al- 
though nature is boundless in her generosity because we 
are now^ so highly civilized that we use goods from the 
four corners of the world on our dining tables. Besides 
these world wide demands we use other things that 
have not been estimated as a part of our daily consump- 
tion. When you read of the market requiring twenty- 
live million tons of pig iron to satisfy its appetite for 
one year you forget that your own appetite consumes its 
portion of pig iron. We read of four hundred million 
tons of coal eaten up in a year and we forget about our 
per capita consumption. 

We consume millions upon millions of pounds of 
lead, tin and copper every pound of which must be paid 
for and balanced in the yearly settlement of each wage 
earner. Assuming that all these products grow as freely 
as berries at the roadside, and that each man, woman and 
child has a particular share in them and must pay for its 
share, we begin to realize the vast and complicated net 
work of natural laws distributing these gifts. This com- 
plicated system of carrying on the distribution and keep- 
ing an indivdual account has a deep meaning for by this 
process every man w^orks for the whole system yet each 
man gets a distinct individual return differing from the 
return of every other man. We do not have equal shares 
in this common good nor do we contribute equally to 
bring it about. Under this plan the evidence of w^ealth 
enjoyed by the individual should be the evidence of 
benefit he contributes. 



88 DISTRIBUTION. 

The wages paid to the laborer are intended to be 
spent and if they are saved it should only be to increase 
the spending to greater advantage at some future time. 
The pleasure we receive from spending is in a large 
measure determined in advance for us because we are all 
born into a world having a fixed and stable existence to 
which we must conform. The necessity for individual 
pushing ahead arises from the fact that each individual 
is charged with his share of the daily expense of running 
this earth and we must pay it with our labor and ability, 
and if we fall behind we are weeded out to be superceded 
by the men who are able. Society advances from lower 
to higher planes as it is able to build an environment 
wherein such able men may thrive and live and push for- 
ward the great work. 

The common good, so much discussed, is common 
only in the sense that the good of nature is universal, 
but is not common in the sense that we are to share 
equally in all the benefits of civilization. 

>!c ^ >5< i{< ^ 

When we read statistics of enormous totals of rail- 
ways and iron and coal and farm products we must not 
forget that this grand total of value is made up and sus- 
tained by tlie daily wages of labor and by the credit 
established by labor. Consider our annual coal bill of 
more than one billion dollars from the standpoint that 
this price must be paid by wage earners and from each 
according to his ability. Does this enormous coal bill 
merely represent an expense for coal which we might 
save? Coal as a material product does not cost one cent 
and its price is but the necessary method of distributing 
one billion dollars a year in wages. 



INTERFERENCE WITH DISTRIBUTION. 89 

Coal carries value along its route which has been 
advanced as a credit by a host of the most dissimilar 
kinds of labor and which will be finally balanced and 
paid when coal is finally sold and consumed. The reason 
coal is so peculiarly fitted to gather up these credits and 
carry them along and discharge them is because of its 
steady flow through the market and its regular daily 
consumption and renewal. This is a very important fact 
to bear in mind because the elasticity of distribution de- 
pends upon mediums of credit like coal and does not de- 
pend upon an elastic currency as we are being advised by 
bankers. 

The labor of man and the purchase power he creates 
is ephemeral, it lives but one day and must be renewed 
the next day. It is important that we gather and dis- 
tribute this purchase power so we may each buy our 
share of the gifts of nature, and it is equally important 
that it gathers upon property like coal and food which 
will as readily release it by being consumed. 

The total price of property is not something we may 
increase without limit, we could not for example pile 
up stores of coal and pig iron and copper and wheat and 
corn and clothing and increase the total price and 
wealth in this way. The total price is fixed by the pur- 
chasing power, and if we store the work of a week as a 
credit and try to have it redeemed in a day by selling 
the goods we suffer by a great decline in prices and a 
great waste of material. Wealth cannot be increased by 
piling up goods beyond our daily requirements because 
we need the service of men for more important work, 
and we cannot liquidate debts any faster than our daily 
credits will pay them. We depend upon a daily circula- 
tion of money and the value of this money is limited by 



90 DISTRIBUTION. 

the time-labor for which it is paid. The greater the sum 
spent for daily wages the greater will be the volume of 
our activity, because this activity is multiplied by the 
number of times which a day's work may be used as a 
credit. 

Remember how our market is made up, remember 
that we each consume a share in coal, pig iron, copper, 
railways, light and all other forms of property. As the 
reader is able to extend his view and to take in this com- 
plex system of production and distribution and to see the 
number and windings of the roads we follow he will 
realize the most important of facts, namely, that time 
is the most important element in civilization. When the 
savage first discovered some way of keeping a record on 
his fingers and began to count he saved time for himself, 
and when a language developed it saved time for all the 
men so endowed. We have received from nature a lim- 
ited and fixed amount of vital power and our only road 
for advancement is to discover methods by which we may 
save time in our actions so that a limited power may in- 
crease the number of its activities. Every advance we 
make is made upon the basis of our having a limited 
force of vitality and we use it up in a given time and 
our only chance to gain is by making the most of our 
time. 

Hence we find natural laws are so formed, and we 
must study them according to the time we may utilize 
and save. Money is valuable on this account and its 
gains are multiplied b}^ the time each dollar may save by 
its use and so also all our machinery saves time and sets 
men free to employ the time saved for higher uses. The 
basis of our system of debts is found in the ability to 
control a share of profits without being required to work 



INTERFERENCE WITH DISTRIBUTION. 91 

for it. Men will buy any form of a debt which will en- 
able them to enjoy the blessings of civilization without 
work, and others will take all kinds of risks and chances 
and will work with frenzy in order to free themselves 
from the necessity of devoting all their time to work. 

The reason w^e have property whose income will 
relieve men from work and give them time to play is 
on account of the time saved and built into a credit by 
property. It is but simple justice that when one man's 
work has saved one hour's time each day for a thousand 
men he should be paid by them so he could save some 
of his own time for himself if he so desired. Unless this 
was done there would be no encouragement for the in- 
dividual to promote the happiness of others. We have 
a vast amount of property that is used to assist labor 
and to thus save time and the profits we pay for the use 
of this property must always be estimated as a part of 
the time we save. 

This fact limits profits to the time of life of such 
property, and since such property must be reproduced 
the profits diminish and wages increase as we move 
along. Unless there was a continual advance in civiliza- 
tion all profits would be absorbed by the general increase 
of wages. There is nothing in this natural system by 
which any man may acquire a right upon the labor of 
the generations yet to come, although they come into a 
world filled with time saving appliances. Unless the 
future generations are permitted to have the advantages 
of the new world into which they are born they must fail 
in meeting the new responsibilities which go with it. We 
must not confuse the profits of this kind which are paid 
for the use of time saving appliances and which are 
never a burden, with the sums taken by a system of slav- 
ery where no benefit is returned. 



92 DISTRIBUTION. 

Such property as our homes, office buildings, fac- 
tories, machinery, railways, water and light plants, may 
pay a large income to capital and also pay large increases 
in wages at the same time. The demands from the own- 
ers of such property will regulate themselves as the prop- 
erty requires labor to operate, to maintain and reproduce. 
Property in land is directly opposed to labor, the ow^ier 
occupies the position of the dog in the manger, he does 
not give anything himself and he must be driven away 
or placated before labor is allowed to use the appliances 
that save time^ 

:^j ^ ^ i!< :^ ^ 

Turn your attention once more to the picture of our 
system of distribution, to vast quantities of food and 
luxuries, of supplies and building material, of mineral 
and metal being daily consumed and of moving a step 
at a time to their respective places. 

We have an almost endless variety and a great 
quantity of these moving stores, our social life is con- 
stantly changing and needs reciprocal changes in the dis- 
tribution of this wealth. We need more coal and more 
iron and less of other things because we make an advance 
in industry and the proportion between each and every 
product is maintained by its price. The difference of 
one quarter of a cent a pound in meat for our great 
packing houses would wipe out their profits on one side 
or double them on the other side if they could not make 
other changes to equalize this change in price. We have 
a given purchase power that maintains all prices and we 
are limited by this power, although prices vary in rela- 
tion to each other the total price of all property is firmly 
bound within fixed limits. It is on account of this limit 
that changes in price of one kind must be met with equal- 



INTERFERENCE WITH DISTRIBUTION. ^ 93 

izing changes of other kinds, because the total price does 
not greatly change. To increase the price of coal for 
example will be followed by an increase in the quantity 
offered and unless the new demand for coal comes from 
a new distribution of purchasing power the greater 
quantity for sale will push the price back to its former 
level. 

jfc ^ ijs ;|s :}: :j« 

Look now at the picture of supplies moving like 
regiments of soldiers to central camps and we will find 
coal and iron, for example, coming from mines widely 
apart and under widely different conditions. Some 
mines are nearer the market than other mines which 
makes a difference in time, and the veins of ore are richer 
and thicker and easier worked at some places than at 
others which is again an advantage in time. 

Farm lands and forests have the same differences in 
situation and in relation to the market. Where lines of 
distribution cross each other from all directions cities 
and towns will grow because at such places exchanges 
may be made with the greatest saving of time. All man- 
ner of products coming from points of supply and going 
to points of demand have to overcome different degrees 
of resistance which consume labor and time but the pro- 
duct sells in a market where such differences have been 
leveled by uniform prices. As a result of the natural 
advantages of some points of supply over other points 
there will be wide margins of profit, owing to the fact 
that demand will meet the price of the most difficult sup- 
ply. This irregularity of natural conditions under the 
smooth surface of the market is something we cannot 
overcome by increase of knowledge or by invention and 
there is no way by which we may compel a distribution 



94 DISTRIBUTION. 

of this advantage except by taking it by taxation and 
spending it for the common good. 

The owner of land favorably located has the power 
to interfere with progress by refusing access to his land 
and he need only wait until labor and capital are forced 
to bid for the land and give up the gain by paying higher 
prices for land. * >k ^^ * >fs ^ j^3^j^ ^\^q i^^^ saved 

money or gained money in business will prefer property 
in land that gives him an income, and he will pay more 
for the same income from such property than for any 
other. 

This preference for property in land, as an invest- 
ment, establishes limits for capital above which all gains 
are drained away to increase the price of land and a 
limit is established for wages above which all gains in- 
crease the price of land. Since the total price is limited, 
land can only have a price by preventing a general ris€ 
in prices of all other property because it takes its pur- 
chase price from the general market. The sums taken 
by property in land increase with every improvement not 
only of machinery, but in arts, literature, education, 
morals and religion, and the rakeoff of the landowner 
follows the footsteps of man from the cradle to the 
grave. Bear in mind that the evil of property in land 
is not measured in ground rent, by the sums we pay for 
the use of land, but is measured by the value of land 
which is taken without giving anything in return. 

Any man who buys land at a low price and sells 
the same land for a high price will realize that he, at 
least, has made money, — but who pays when the pur- 
chaser can always get his money returned by selling the 
land, who loses but labor? The price we must pay for 
land is a perpetual debt which when once established 



INTERFERENCE WITH DISTRIBUTION. 95 

can never be paid, when one man sells the land the debt 
is redeemed and when the other man buys the debt is 
reinstated. The price paid for land is fixed by the sum 
the landowner may take each year from the earnings of 
labor without giving any return, and by his right to 
continue to take this sum from the living and from their 
decedents for all time. 

When land is sold we must not forget that labor is 
sold and the capitalized value of land is the value of 
slaves who are required to work at a fixed return and all 
their earnings above this sum are taken away as a bonus 
by the owners of land. 

The capital offering to build and develop is limited 
by the capital first required to buy land and practically 
one-half of the total expenditure is taken out of the 
labor market in this way. This power of land owners 
is all the more dangerous because it is insiduous, be- 
cause they do not directly exercise their power but labor 
and capital tied down to narrow limits must bid for the 
privileges of widening the bed they sleep in as they are 
being crowded to the wall. 

Let the self-satisfied man take warning in time and 
prepare for the future or his own family will sink to 
the levels of the families he now despises. We have not 
as yet felt the real pressure of landlordism. We have 
steadily worked from ocean to ocean opening a con- 
tinent of new lands and mines and forests. Many who 
have profited from the rise in the value of land do not 
realize how a happy chance has favored them. As we 
keep adding farm to farm, city to city and thousands of 
miles of railroads, we employ a large share of our sur- 
plus in new development by increasing our debts but the 
time is rapidly approaching when all resource from this 



96 DISTRIBUTION. 

direction will close in upon us. Our increasing popula- 
tion now spreads over wider territory only because such 
new development gives rise to new gains and the rising 
prices enable us to experience periods of prosperity. But 
we need not flatter ourselves that the laws of nature 
make an exception in our case and the time approaches 
rapidly when no new worlds will remain to conquer, 
when the advances we do make cannot effect the great 
mass of our wealth. In a few years when we face this 
condition, we will be like prisoners in Russia, confined 
in cells with moving walls that close down upon us 
slowly but relentlessly day by day, and the only escape 
is to break down the walls while we have the strength 
and before it is too late. 



Tke Price of Land the Cost of Slavery. 



CHAPTER NINE. 

THE peace of the civilized world now depends 
upon the patience and virtue of its working popu- 
lation, who when once aroused to a full sense of 
the injustice of the modern distribution of wealth will 
wreak their vengeance upon society. The injustice 
which reeks through the world and undermines its foun- 
dations can do so only as it spreads among an ever in- 
creasing number of people and comes in closer contact 
with each member of the body politic. The mass of 
mankind is too fully occupied with the immediate de- 
mands of life to consider injustice when it is farther re- 
moved than their own doorstep and until the creeping 
evil with its hundred legs crosses the individual path. 

The working world cannot, moreover, act singly 
against wrong and injustice as the wrongdoer may act 
against them. Labor is being robbed and exploited by 
bad laws and a false system and must endure patiently 
until the accumulated evils force them to a cumulative 
resistance. The ignorance of mankind has in times past 
held them in fear and slavery but now the light is spread- 
ing and men understand the meaning of revolution who 
'before were taught implicit and slavish obedience to 
custom. 

Our land system reduces labor to slavery by pre- 
venting it from sharing in the benefits of new develop- 
ment. 



98 DISTRIBUTION. 

The money spent for land is money that otherwise 
would have been spent to buy some kind of property 
requiring some service from labor and would have been 
distributed in wages. The effect of diverting the stream 
of demand from the general market to the real estate 
market is to cause a failure of demand in the general 
market, the supply failing to be sold begins to compete 
so as to sell at lower prices. 

To speak about a supply of goods being sold at 
lower prices is to say the purchase power can not take 
the supply at the former price but if the price is re- 
duced so as to meet the lower volume of purchase power 
the volume of goods may be sold at a lower price. 

The purchase price provided by natural laws is 
amply able to buy all the possible supply because while 
the supply is being created, the purchase power equal 
to it is also created at the same time, and by the same 
operation. 

But when money received from wages is spent for 
land the purchase power is turned aside and the demand 
for labor is changed to a demand for land. Competition 
comes into the market to lower the level of prices so as 
to equalize the supply to the lower level of demand. 

Competition in the sense that prices are regulated 
by it, and monopoly in the sense that it defies regulation 
is as close an approach to absolute human stupidity as 
can be found in all literature. Our legislators and courts 
are spending almost half their time devising laws to en- 
force competition and devising punishment for monop- 
oly, they are taking it for granted that competition is 
the patron of all virtues and monopoly is an invention 
of the devil. It ought to be clear that prices are regu- 
lated by natural laws and our troubles arise on account 
of our interference with these laws. 



THE PRICE OF LAND THE COST OF SLAVERY. 99 

The writer once secured an option on nine acres of 
land at the edge of a growing city and divided the land 
into lots and sold them for enough money to pay for the 
land, and to build a modern seven room house. It was 
very clear to him that there was a vast difference be- 
tween getting a home with this easy money in a few 
months than in the regular way of working every day 
for wages and by years of saving acquire enough money 
to build a house. 

It was also clear that this house came as a gift from 
some unknown source as though Aladdin's lamp was 
rubbed and a brand new house appeared. There was no 
service given in exchange because buying land at a low 
price and selling it in smaller parts at a higher price 
accomodates no one but makes it more difficult to live 
by making land more expensive. This house was se- 
cured as a bonus, and some people must have been com- 
pelled to build it and give it away and were thus de- 
prived of having a home of their own. This loss is very 
difficult to trace because no particular person contributed 
to this gift at any definite time. 

The reason a loss of this kind can be so minutely 
divided and so widely distributed and escape detection 
arises from the fact that the buyer of a lot changes his 
money from a credit payable on demand into a debt. 
The money received from the sale of lots is used to 
build the house and labor redeems its credit on demand 
by building the house, but the debt remains to be col- 
lected from the mass of laborers at the option of the 
owner of the lots some time in the future. 

When lots are sold for money the sums received are 
credits upon labor redeemable on demand, the man who 
buys noes not need the present services of labor but 

LOFC 



100 DISTRIBUTION. 

wants future service which he feels sure of getting at 
any time by again selling the lots. 

But when the money is used to build a house labor 
has redeemed its debt but is under the necessity of re- 
deeming the same debt over and over again as often as 
a surplus can be accumulated and the lot be sold. 

When a house is built we bring a new creation into 
existence and something is added to our environment, 
something to promote civilization, to save time and to 
increase our chances for good living. When we pay for 
a house we are paying for a new appliance that will 
benefit us more than it costs. 

We cannot build houses individually, we have 
neither the knowledge or experience, hence we exchange 
a service that is easy and habitual to us, when we buy a 
house, for other services that would have been difficult 
if not impossible. 

But the land we buy has no such relation to our 
lives. We buy land because we cannot otherwise build 
and improve. The price we pay for land is a contribu- 
tion forced upon some one and since the buyer can not 
he made to suffer he may shift the loss upon the land- 
less. The reader may not be able to see clearly that 
spending money for a piece of land can differ in principle 
from investing money in a savings bank to be loaned to 
labor. He may admit that the profit taken from the 
increase in value of land is a loss to labor but cannot see 
that it differs from profit taken in any other transaction. 

What, for example, is the difference between buying 
a building lot for two hundred dollars and then selling 
it for a profit of fifty dollars, from buying a horse for 
two hundred dollars and selling the same horse again 
for two hundred and fifty dollars. 



THE PRICE OF LAND THE COST OF SLAVERY. 101 

The difference is wholly a question of who gains or 
loses in the transaction. A man buys a horse for fifty 
dollars less than it proves to be worth and he makes 
fifty dollars in the trade and, if you please, the other 
man lost fifty dollars. In this case the transaction ends 
here and has no public concern as it is an aft'air wholly 
between two individuals. 

But when a man buys a horse for two hundred dol- 
lars and makes some one else furnish him the money, 
it becomes a very dift'erent problem and in such case, the 
officers of the law begin a search for the man to punish 
him as a thief. 

When a man spends his savings for a horse the 
money so spent was his own and he pays for the horse 
by his own services and such buying is always limited 
to the men directly concerned. 

The same is true of a bank deposit. You may de- 
posit your savings in a bank to be drawn out at some 
future time when you may spend them at your leisure. 

Meanwhile the deposit may have been loaned over 
and over again and have been issued to labor and re- 
deemed many times but in each and every transaction of 
this kind no one could be injured because no one but the 
people directly concerned can be made to pay. 

But when land is bought something is sold w^hich 
no one earned and which originally cost no man any- 
thing. The price paid for land must be made up by 
small contributions exacted from the pennies of the poor 
because when land is dear the landless become poor by 
contributing the value of land to its owners. 

You often read how certain great corporations in- 
crease the price of their product and thus impose what is 
called a tax upon the consumers and you read further- 



102 DISTRIBUTION. 

more how this higher price enables the corporation to 
pay large dividends and thus to issue and sell great 
quantities of securities which have no other foundation 
of value than the ability of the corporation to collect and 
pay the dividend. 

But suppose a corporation was organized that could 
control, not one price, but all prices of commodities by 
merely controlling the exchange of titles between land 
owners and could collect all we pay for commodities^ 
above the cost of production. The dividends of this 
corporation would then support securities equal to fifty 
billion dollars in value and such securities would sell in 
our market as readily as real estate now sells. 

The entire sum of our land values would in such 
case appear in its true light as a monstrous debt fast- 
ened around the necks and resting upon the shoulders of 
the poor which they are never to be allowed to pay but 
which they must forever redeem in part as fast as a sur- 
plus arises by which the real estate market may be made 
active and land values be made to advance and the debt 
to increase. 

This new form of slavery is all the more vicious 
because it is so insidious and because no one man di- 
rectly enslaves any other man but allows the rich as a 
class to enslave the poor as a class. 

It is this slavery in our midst that gives rise to 
commercialism and snobbery, to the grovelling to wealth 
and to the rapid development of new forms of caste. 

We may bewail the worship of Mammon and the 
hardening of hearts in our scramble for wealth. 

We may feel just contempt for the independence 
and assurance of our men of money but they are made 
so by the servile conduct inspired by the fear of slavery 
in other men. 



THE PRICE OF LAND THE COST OF SLAVERY. 103 

People must feel this new slavery instinctively be- 
cause they so instinctively shun poverty and seek to 
escape its appearance and to deny any suggestion of it 
in their daily lives. 

The history of mankind tells us clearly that man 
and woman will prefer and submit to any form of social 
vice and crime before they consent to become recognized 
slaves. 

Modern poverty in contrast with modern plenty 
produces a slavery more degrading than the slavery of 
Rome in its decline, you avoid the poor and condescend 
to them because you are beginning to realize that they 
are slaves. 

The men who advocate land reform assert freely 
that the power- of the land lord is the power of life or 
death over the landless. They assert that the men own- 
ing the land may drive the landless off the earth and by 
reason of this powder take away from labor and capital 
all they may gain above the sums required to keep them 
at work. 

While we must acknowledge that a legal fiction con- 
fers upon the individual land owner such lordly powers, 
yet as a matter of fact, the laws of distribution hold him 
in check. 

If individual landowners had been given such pow- 
ers their greed would long since have overstepped all 
boundaries and the civilized world would have returned 
to barbarism. Each landowner seeking to get more from 
labor than another would long since have driven the 
landless to become savages. 

In a simple condition of industry where the relation 
betw^een landlord and tenant was direct and where his 
power over the tenant was absolute, the landlord was 



104 DISTRIBUTION. 

forced by his own interest to make some kind of a 
gain with his laborers so as to have them produce a sur- 
plus for his own use. 

As industry has grown and has become more and 
more complex this direct power of landlord over tenant 
has disappeared and the landlord must depend upon his 
power to influence prices in the general market in order 
to get something for nothing from labor. 

It is true the landowner may now demand more 
rent for the use of his land than the rate of wages or 
the price of goods will permit labor or capital to pay. 

But it is also true that such landowners like the 
capitalists who want too much from the market, are 
quickly ruined and sold out by the sheriff. 

Admitting that the sums paid to landowners as rent 
for the use of land are a robbery of labor and capital 
without justification or excuse, nevertheless the sums so 
taken do not account for the losses and wrongs in our 
civilization. 

The sums of ground rent equal more than a billion 
dollars each year above the taxes paid by landowners. 

And the ground rent collected from industry per- 
mits a small army of men and women to live in luxury 
at the expense of society. 

But the rapid advance of machinery and the increas- 
ing gains of industry would make such a loss a mere 
trifle in the annual settlement of our business if the evil 
of our land system was limited to the annual payment 
of ground rent. 

To understand the greater evil, to understand how 
the price of land prevents labor from increasing his 
wages and his purchase power and thus prevents the 



THE PRICE OF LAND THE COST OF SLAVERY. 105 

growth of civilization is to understand the important 
problems of our civilization. 

Property in land can have a price only as it is able 
to find a buyer of land in the market. The sums which 
accumulate in the market with which to buy land can 
only accumulate during prosperous periods when profits 
arise and increase. 

W^hen property in land offers an investment for this 
money the demand changes from a demand for goods 
which caused the prices of goods to advance to a demand 
for land which then causes prices of land to advance. 

This change in demand undermines the market and 
the increasing floods of goods must sell at lower prices 
in order to be sold. The money spent for land is not 
buried in the land and does not diminish the quantity of 
money on one hand nor the quantity of credits which 
have accumulated during the era of rising prices on the 
other hand. 

A man buying land with the money he has accumu- 
lated merely changes places with some other man. 

The sums accumulated in banks as a credit do not 
diminish on this account but merely concentrate to fewer 
owners. 

What happens when the price of land advances is 
that the bank credits are used to increase land values. 
Some men change a credit payable on demand into a 
debt payable in the future and other men sell land and 
change debts payable in the future into credits payable 
on demand. 

When land values thus advance six or more billion 
dollars in prosperous times we have used our bank de- 
posits to increase the fixed debt represented by land 



106 DISTRIBUTION. 

values by six or more billion dollars and we have also the 
original sum of bank deposits redeeemable on demand. 

This process shifts ownership of land from men 
who need money to men who do not and the credits in 
banks gravitate to a class of men who will soon demand 
payment. During this period, while bank deposits were 
growing, the volume of money was being contracted to 
become a reserve. 

Labor will only redeem credits by accepting actual 
primary money for their work and on some fair day 
when financial skies seem clear the attempt to redeem 
impossible credits on demand provokes a storm out of 
the clear sky and we are visited by a panic and all the 
misery and suffering and crime it brings in its train. 



Wkat tlie Single Tax Will Do. 



CHAPTER TEN. 

HENRY GEORGE was inspired to write Progress 
and Poverty by the misery he witnessed in the 
cities in contrast with the conditions he found in 
CaHfornia. He was among the early gold-seekers who 
rushed to the Pacific coast, a restless, energetic, adven- 
ture-loving band of pioneers, composed of men in the 
prime of life, of every trade and calling, but of little capi- 
tal, and few animals or tools. 

These men landed on free and fertile soil with but 
their own hands to gather riches for them. Henry 
George told us that from the beginning wages for all 
kind of labor were considered high. These gold-seekers 
had a new empire before them and began to work with 
high wages but without capital or improvements, they 
had high hopes and great expectations of the wealth 
that would flow to them when capital, tools, and inven- 
tions, doubled and quadrupled the power of their bare 
arms. 

They expected that with every increase in numbers 
there would be a better co-operation and market, and all 
wages would advance, that new tools put to use, every 
new road opened, every house built and the increase in 
capital would all co-operate to increase the power of 
each laborer and would greatly increase wages. They 
had hopes of railroads and better service on the Pacific 
and naturally expected that poverty would be forever 



108 DISTRIBUTION. 

abolished and progress would continue without interrup- 
tion in the new empire. What happened in California 
within the lifetime of these pioneers is now a matter of 
history, their hopes and dreams were fulh^ realized as 
to the advance of wealth, and in the power of labor to 
create wealth, but they were to be bitterly disappointed 
by the distribution of this wealth and by the increasing- 
pressure of poverty in the face of the most remarkable 
progress. 

The increase in power came to California, inven- 
tions multiplied, shipping increased, railroads were built, 
farming grew beyond their own needs and a golden 
abundance overflowed all their markets. But the diffi- 
culty in California was the stationary distribution of 
wealth to labor, the failure of the men who produced 
this overflowing plenty to get a just share in it. The 
mystery of the distribution of this wonderful gain was 
the cup of Tantalus ever at the lips of labor but never 
to quench his thirst. Although wages Avere stationary 
or declined for the mass of the w^orkers, there was a 
marked and wonderful increase in the value of land that 
seemed to absorb this gain. 

Mr. George said while riding out one day on his 
horse, many miles from town he met a solitary man 
working in a field surrounded by miles of vacant unused 
land. In conversation with him he asked the price f 
land thereabout, and his acquaintance replied that there- 
abouts there was no land for sale, but some miles farther 
away he might buy land for a thousand dollars an acre. 

A thousand dollars an acre had an ominous and 
warning sound in the ears of Henry George. A thou- 
sand dollars an acre for land which had never felt the 
touch of human hand but lay in wait like a robber for 



WHAT THE SINGLE TAX WILL DO. 109 

the coming of industry and civilization to gather in its 
thousands of dollars. 

It was this land, at a thousand dollars an acre, that 
started his great hrain to thinking and led to the Single 
Tax movement inspired by Henry George. 

This calls to my mind an experience in Central Illi- 
nois a few years ago when the farmers were selling their 
land at high prices to move on cheaper lands and repeat 
the experiment. An Illinois farmer at whose house I 
stopped for the night had just returned from a land hunt 
in central Indiana and was not pleased with the farms 
he inspected. He said ''the great objection I found to 
Indiana farms was the lack of uniformity, that I saw 
no single quarter section of land that was all good, it 
had either a swamp that could not be drained or a barren 
knoll." "Here in Illinois," he said, 'T can close my eyes 
and pick out any section of land in twenty miles square 
and not a single quarter section will have a poor acre 
on it." 

I replied that I was familiar with the section of 
Indiana he described and was surprised at his opinion. 
I told him that in Indiana every section had a good 
gravel pike on one side, that there were good fences and 
houses and barns on every quarter, the farms were pro- 
ductive and had plenty of stock of all kinds. In Indiana, 
I continued, there were wxll-filled school houses in every 
towmship, and churches on every side with good towns 
and cities in every county. I said that there was no dif- 
ficulty in paying taxes which were about one dollar per 
acre as against forty cents in Illinois, but there was 
much to show for money spent from taxes. 

''Here in Illinois, it is true, you have the most fer- 
tile land under the sun and this land has now been culti- 



110 DISTRIBUTION. 

vated for twenty-five years in corn without a change in 
crop, without a crop failure, and with Chicago a close 
market. What have you people in Central Illinois to 
show for all these years of hard work, for all this corn 
and stock you have been sending to market. You have 
no roads and no ditches, you cannot leave your farm- 
yards in winter and are shut out from the world for 
months at a time. You have no good barns or farm- 
houses and tenants are allowing the old houses to fall in 
ruins, you are closing your township schools because pop- 
ulation is so sparse that you have not enough children 
to support schools. Let me tell you what you are doing, 
the early settlers coming to this part of the state bought 
land for five dollars per acre and each one tried to buy 
all the land that joined his own. You refused to pay 
taxes to build roads or ditches or make any permanent 
improvements and support schools. 

"Every dollar that was saved was spent to buy more 
land, paying part in cash and giving mortgage for part. 
The result of this general buying and selling of land 
with the proceeds of twenty-five years of hard work is 
now the same land without improvements, much reduced 
in fertility and selling for twenty-five times its former 
price. Your gains were lost in every panic and tenant 
farmers succeeded the independent cultivator, you have 
no evidence of wealth, prosperity or happiness for miles 
and miles of the most fertile spot on this round world. 
What has this buying and selling land done for the peo- 
ple except to advance the price of land by gambling away 
your savings, hoping In this gamble to get the earnings 
of other men by owning all the land." My host was sur- 
prised and said the idea was new to him, and it did look 
as though they had labored in vain. 



WHAT THE SINGLE TAX WILL DO. HI 

Henry George was the first to see that in some un- 
explained way the rise in the value of land just about 
balanced the increase of wealth that failed to go to labor. 
He saw intuitivel}^ that most of the gains from inven- 
tions, from science, from new lands, railways, telegraphs 
and machinery were not distributed to labor but did 
have the effect of increasing the selling price of land and 
of doing this in the ratio of this increased power of pro- 
duction, while wages remained practically stationary. 

But in attempting to find a solution and explanation 
of this modern Riddle of the Sphinx he followed the 
economists who were before him and omitted value from 
consideration, thinking it to be of no practical import- 
ance, to represent a mere ratio of exchange, a mere con- 
venience in the barter of commodities. Let us examine 
the explanation given by Mr. George, so we may thus 
set out our own problem more distinctly by way of con- 
trast. Instead of seeing that value of land arose from 
the investment of profits that failed to be distributed, 
Mr. George saw only the annual rent for land as thq 
failure in equal distribution. 

He saw vast tracts of unused land held for higher 
prices and he reasoned that if this land was as free as 
when he first landed in California it would take up the 
idle and underpaid labor, and the increase in products 
thus secured would reduce prices and add so much more 
to the total goods to be distributed. Thus to Henry 
George the solution of the riddle became a question of 
the unused land and of an increase in the quantity of 
products and of increased competition. More land was 
obviously not needed anywhere in California in order to 
increase the quantity of goods, or to take up all the la- 
borers, but only higher wages, which upon being spent 



112 DISTRIBUTION. 

would call idle labor into employment upon the land al- 
ready paying rent and not fully used. The land in use 
was nowhere producing the quantity, nor employing the 
laborers it was capable of employing, because there was 
no profitable market in which to sell the products. For 
this reason men were forced to compete with other men 
for employment and wages could not rise, not because 
there was any scarcity of land in use but because pur- 
chasing power was badly distributed. 

The whole difficulty was to be found in the purchase 
power, the quantity of products of every kind overflowed 
the market, but in order to sell, prices had to be reduced, 
which discouraged production and reduced wages thus 
keeping men out of employment. Aside from this, it 
should be very clear that unused land could have nothing 
to do with the main problem, the wealth growing from 
the land in use was superabundant, there was no famine 
but there was a failure of distribution which more land 
put in use could only aggravate. 

Let us now consider what it means in our problem 
to reduce all its terms to questions about commodities 
which we consume and which are delivered at our doors 
and leave value out of the question. By omitting value 
we also omit from calculation the distribution of our 
railways, steam ships, factories and all great enterprises 
of which we can get no part in distribution unless we 
get a share in the value of them. How can any conceiv- 
able trade in consumers' goods include the finished rail- 
roads, factories and all the modern appliances which inr 
crease our w^ealth? It is true they are built up from 
consumable goods and goods are consumed In their con- 
struction but this is not distribution by which we can get 



WHAT THE SINGLE TAX WILL DO. 113 

any benefit, and our share can only arise by getting a 
share in ownership after construction. 

If the goods that merely satisfy our hunger, our 
pride or ambition was all in which the workman was 
supposed to share he would forever live from hand to 
mouth and be denied the independence arising from the 
t)wnership of income property. Is not the problem of 
modern civilization wholly outside the distribution of 
goods which must go to the masses, because otherwise 
they could not be sold, and does not our problem lie 
wholly within the distribution of homes and of vast prop- 
erties now concentrating to a few men? 

The problem to-day is not one to relieve the mass 
of the people from hunger and nakedness, but to relieve 
them from the anxiety of a hand to mouth existence, 
which is prevalent in spite of our enormous consumption 
of food and clothing and great numbers of luxuries. 
What does it prove when you say ''labor is getting more 
wages than ever before, that he is spending more, that 
he has more luxuries and his children are better clothed.'* 
The standard of family living has risen to a level that 
now strains the energies of the best paid workman to 
keep in the race, and on this account the discontent of 
labor is not relieved but is increased. 

To argue for the benefit of a better hand to mouth 
existence is the same as to argue for the delights of a 
glorious drunk or for the pleasures of the opium eater. 
Modern discontent is based upon the very fact that we 
now need much more to only live from hand to mouth 
and that so much more is now required from the meager 
wage. To be deprived of this standard of living is a 
social disgrace, and to have no other dependence is to 
have the sword of Democles suspended over our heads. 



114 DISTRIBUTION. 

Society requires that we must not only live well 
every day and provide well for the family but we should 
have some safe footing so that a day's loss of wages will 
not cast us out into the needy and helpless classes. It 
is not because people are hungry and cold that we have 
such general discontent, but because they walk with un- 
certain step along a dizzy precipice, just above them is a 
safe and joyous living, and just below is poverty, in- 
sanity, vice and crime and we see many slipping down, 
but few climbing higher. 

When Henry George saw idle labor on one hand 
and unused land on the other he jumped to the conclu- 
sion that one was cause and the other effect. If the in- 
creased purchasing power arising from the use of ma- 
chinery in California had been distributed in higher 
wages instead of being wasted in buying land there 
would have been no idle labor and less land would have 
been required than by the wasteful method entailed upon 
that community. 

In order to produce in greater quantities we are not 
necessarily required to open new lands and mines and 
forests but we are strictly required to have a better mar- 
ket for products. In California the introduction of 
modern civilization did enormously increase the poweii 
of labor and this power when it becomes value means 
purchase power. The fact is apparent that modern ma- 
chinery was in use all the time /turning out enormous 
totals of something and labor was not gaining its share. 
Labor has no chance to get its share unless the purchas- 
ing power of labor is increased, this purchase power is 
measured by value and it is easy to see that the purchase 
power which failed to go to labor did go to landowners 
in the increased value or purchase power of land. 



WHAT THE SINGLE TAX WILL DO. 115 

Looking now at the power to purchase from the 
other point of view and omit value and fixed property 
from the problem,, we may soon discover why attempts 
at explanation end in failure. In common with other 
economists Henry George believed that the purchase 
power of labor was only to be increased permanently by 
lower prices of commodities. This commodity theory 
asserts that machinery is made effective by greatly in- 
creasing the quantity of goods produced and thus cheap- 
ening the price of machine products. As a resuk of 
this increase in quantity of goods competition was to be 
the hope of labor and he was to get a share of the bene- 
fits of machinery because at a lower price he could buy 
a few more supplies. 

It was very unfortunate that Mr. George was so 
far misled by the old economists because he educated a 
host of defenders of the most indefensible evil of our 
time. It seems to never have occurred to the defenders 
of competition that the facts were violently opposed to 
their theory, and that it was not by cheap prices labor 
was to share in civilization but by high wages. By wages 
so high that after buying the goods he needed, he could 
buy the railways and factories he had built. 

The effect of this defense of competition has been 
to obscure the great work of Henry George and his fol- 
lowers have been leading into a wilderness instead of 
leading to the promised land. The greatest mistake we 
make in legislation, the mistake that does most mischief, 
is to enact laws trying to enforce competition at a time 
when nature is striving with might and main to abolish 
it, and when she is enriching men beyond imagination, 
who help her to make monopoly the universal rule of 
industry and commerce. Why is the truth so general 



116 DISTRIBUTION. 

that during times of low prices our country is filled with 
poverty, distress and idleness, that low prices and pen- 
niless buyers come as twins to perplex us ? 

There are no facts to support the writers who de- 
fend competition, not a fact to show that anyone is bene- 
fitted on account of the low prices of commodities, but 
on the contrary all the facts without exception demon- 
strate that times of high prices are times of wide gen- 
eral prosperity and high wages. 

.How could it be otherwise? How is it possible to 
distribute increasing wages to labor and not expect la- 
borers to increase prices as they increase their buying 
on such enormous scale? AVe do not deal with the buy- 
ing of one man, but with the millions of men, women 
and children who spend money. 

We have before us a straight and narrow road to 
travel to secure reform, and a blind man although he 
runs, need not stumble therein. We dare not interfere 
with profits because we depend upon profits to advance 
Avages and promote civilization. We dare not interfere 
with created property because we depend upon property 
to reward the frugal and industrious and to secure the 
welfare of the family and home. But with injustice so 
appalling and with evils so wide and universal we cannot 
hope for permanent good unless we adopt some measure 
which will insure radical and far reaching changes. We 
must in plain words make so radical a change in the dis- 
tribution of wealth as will give to each man and every 
person their full rights in all the benefits of our civiliza- 
tion. 

The change we propose is to change sixty or more 
billion of dollars from the debt side on the national ledger 
to the credit side at one stroke, and then allow the 



WHAT THE SINGLE TAX WILL DO. 117 

natural laws to bring about the individual correction. 
We propose to so obstruct one wide channel of distri- 
bution as to prevent all flow of wealth in that direction 
and to destroy the prices of all property depending upon 
this flow. And at the same stroke and by the same in- 
strument we will open up thousands of other channels so 
that wealth may follow its natural outlets that other 
property may gain the prices that property in land loses. 
\\c may easily accomplish this radical change without 
disturbing any individual in his ownership of property, 
by a simple change in taxation. 

We may change the location and distribution of bil- 
lions of dollars worth of property by merely changing 
the income upon which the value depends, and we may 
transfer the value of land to other property by taxing- 
land value and by taking taxes off of other property. If, 
for example, fifty billion dollars worth of land, lots and 
mines, will sell for such sum because they return a net 
income of two billion dollars a year, we may drive away 
this fifty billion dollar price by taking the two billion a 
year in taxes, and by remitting two billion of taxes in 
other classes of property. We furnish a transfer of 
value and the price of land will change into the price of 
other property. 

This is a concise and simple statement of the effect 
that will follow upon the adoption of the single tax 
which has been so ably presented in the writings of 
Henry George and Thomas G. Shearman. As a mere 
reform in taxation, without taking into account the radi- 
cal change in the distribution of wealth, this system 
meets the approval of all students of this much discussed 
question. Mr. Shearman was so deeply impressed with 
the inequality of the present system that he dismissed all 



118 DISTRIBUTION. 

other claims from his mind and founded his faith upon 
taxation alone. He considered that the change in the 
tax burden proposed by single tax would so effect the 
savings of the common people and so prevent the accum- 
ulations of the rich as to effectually change the distribu- 
tion of wealth in a generation. 

Men of wealth are now successful in escaping taxes 
because we attempt to tax thousands of different kinds 
of property in as many different ways, in different times 
and at different places. The present system allows just 
so many thousand openings of escape and makes it easy 
to shift from one kind of property to another and to 
move from a place where your property is known to 
where it is unknown. But the laborer cannot escape be- 
cause taxes must come from wages and are taken out 
of profits, and when we levy taxes upon a man's property 
we merely require him to collect such taxes from labor 
and expect him to surrender them to the treasury. When 
any man may hide or evade this tax he is able to pocket 
the sum collected and labor must again pay by an increase 
of taxes in other directions and by taxes upon consum- 
able goods. Mr. Shearman was deeply impressed with 
the present unjust system because as a lawyer having 
wealthy clients he was so often called upon for advice 
to enable them to escape taxation. 

Mr. Henry George held different views and while 
admitting the tremendous incidental benefits to be de- 
rived from a system of taxation which was eminently 
just, and which no man could cheat or evade and which 
offered no premium upon liars, yet, he hoped to forever 
abolish poverty as the great and immediate result of 
single tax. In the single tax Henry George saw a wea- 
pon that would forever abolish landlordism from the 



WHAT THE SINGLE TAX WILL DO. 119 

earth and to his mind landlordism and slavery had the 
same meaning and produced the same results. In order 
to prefer the idea of single tax as advanced by Mr. 
Shearman over the more radical idea of Henry George 
we are invited to take more for granted than was asked 
by Mr. George. 

Mr. Shearman proposed that by remitting taxes on 
goods, tariff, internal revenue and personal property the 
result would allow laborers to save all this gain in taxa- 
tion and this would increase labor's opportunity to save 
at the rate of about one billion dollars each year, and 
would retard the wealth of the plutocracy by a like 
amount. Although this calculation seems to balance like 
a problem in bookkeeping there are a number of entries 
left out. We are asked to take it for granted that in 
such case wages would not fall as laborers found they 
could save more money, and also that prices would not 
change and that capitalists who stand in front of labor 
would allow this saving in taxes to get around them 
without taking any of it. 

The trouble with such a weak presentation of the 
case is that labor w^ill not consent to the change for the 
slim chance of such a remote gain and the hope of get- 
ting a little increase in savings. It is not in the province 
of labor to crawl and cringe and beg and petition for 
his earnings and to be satisfied with what remains after 
the Horse Show Royalty has been supplied, but he must 
have his earnings first and the other world must wait 
and gather the crumbs that fall from his table. The 
vision of Henry George was the clear vision of the in- 
spired prophet and it was unfortunate that the single 
tax movement was led astray by the cold calculations of 
Mr. Shearman which w^ere permitted to supercede the 



120 DISTRIBUTION. 

warm heart impulses of Henry George and the religious 
enthusiasm of Dr. McGlynn. 

The single tax will accomplish all that the genius of 
Henry George pictured and all that the devotion of Dr. 
McGlynn and his Anti-Poverty Society hoped and be- 
lieved. When the single tax is fully instituted the bil- 
lion upon billions of dollars which are now a value of 
land and watered securities will change from a debt now 
creating the most degrading system of slavery to a credit 
which will insure the weakest member of society the 
full enjoyment of all the benefits of civilization. By this 
one stroke of taxation, by placing the entire burden of 
taxes upon natural advantages which no man has the 
right to appropriate and to free all forms of property 
from direct and indirect taxes we will change the en- 
tire flow of demand and supply. There will then be no 
price for land and no intereference on this account with 
the true level of prices and instead of the low level 
established by competition and a high level established 
by monopoly we will have but one level which will con- 
sist of the highest possible wages and prices. 

Without any other laws we will make protective 
tariffs, labor organizations, patent laws and special legis- 
lation inoperative. No organization of labor or capital 
can raise prices above this natural level. Sixty billion 
dollars of debts changed into si:^ty billion dollars of 
credits will make a change so profound and so far 
reaching that the human imagination is utterly powerless 
to predict or estimate its effect. 

As prices of land are driven down by taxation the 
pressure of competition and of idle capital will be re- 
moved and wealth will flow into the channels calling for 
labor and must greatly increase wages. This change in 



WHAT THE SINGLE TAX WILL DO. 121 

demand for labor will run into billions each year 
and we will then realize how much we are blessed by 
the introduction of machinery and by the discoveries of 
science. \\^ith prices and wages risen to the natural level 
war will become far too expensive for the most favored 
nation to undertake. W^ith high wages and a new stan- 
dard of living holding up a new world of delight to 
mankind no one may be had for the soldiering business, 
unless he volunteers to fight for a noble cause regardless 
of pay. 



iut One Problem to oe Solved. 



CHAPTER ELEVEN. 

IN CONCLUDING this study of distribution we need 
to gather together its many sides and complex rela- 
tions into a single view. We need to look upon dis- 
tribution as it covers the civilized world in its complete 
mastery of all social activity. The reader must not make 
the mistake of confusing a great number of effects flow- 
ing from one cause, into believing that we suffer from 
a number of social evils having a corresponding number 
of causes and requiring separate and distinct treatment 
for each class of evil effects. 

There is no capitalistic system robbing labor, as a 
distinct evil ; there is no landowning system to be abol- 
ished. There are no trusts to be busted, no money 
sharks to be hunted down and destro3^ed and no tyrants 
to be dethroned. 

We have but one great crime to remedy, from 
which all evil flows and all iniquity springs. There is 
one world wide crime that produces all other crimes, 
together with its vices, its poverty, its suicide and in- 
sanity. 

There is but one great evil to be abolished, not a 
new monster born of modern conditions, but a crime as 
old as the human race, the crime of slavery. Be not 
deceived into believing that the talk you may hear about 
modern slavery is but a figure of speech, be warned in 
time of the truth. 



BUT ONE PROBLEM TO BE SOLVED. 123 

We are confronted by an actual slavery of the 
masses of our people, a curse more damnable than any 
the greed of man ever before fastened upon the human 
race. 

Modern slavery differs from the slavery of the past 
because our people are slaves to a system and to unknown 
masters. Instead of knights and barons spreading chains 
across the rivers of commerce and taking cargoes and 
people for their purposes we have great industrial battles 
and schemes of finance for which slaves are used to 
furnish funds. Now men, women and children are 
harnessed to tasks more cruel, and to masters more re- 
lentless* than old slave drivers. 

Men, women and children are now speeded by ma- 
chinery to make money, to establish deposits of value 
that become counters in battles between men who stake 
the millions wrung from slaves upon the changes of a 
stock ticker. 

In a great industrial corporation like the United 
States Steel Company the purpose of the management is 
not to secure products for general distribution but to 
control industry, to pile up unlimited profits and to en- 
gage in the new sport of kings who desire to divide the 
ownership of the world among a few financiers. 

When black slaves worked in fields making cotton 
and tobacco, the limits set by nature, the rising and set- 
ting of the sun, the time and the season offered some 
relief to the slave. 

In chattel slavery the owner had to be content with 
a natural limit of the product and could reward the in- 
dustrious slave by some show of favor. But now there 
is no limit to the fierce and unrelenting toil imposed on 
slave labor because there is no limit to the sums which 



124 DISTRIBUTION. 

may accumulate as a credit to the masters and no limit 
to the ambition to buy all the property in the civilized 
world over and over again in the changing fields of 
financial wars. 

Slaves are so plentiful and the possibility of free- 
dom is so remote that families are divided, the sons 
going down to the gutter by drink and degeneration 
and the daughters following, they know not where, seek- 
ing to escape they know not what. 

Slaves are so plentiful that women and children by 
the million are bound, they do not belong to particular 
owners but may shift to new masters at will. They are 
so plentiful, and they are so set about by hunger and 
anxiety that seeking a master has added a new burden 
to the modern slave. 

Slaves are so plentiful that one of a family is 
owned by another, and the poor relations divide into 
degrees of desperate desponding servitude. 

Because of our universal slavery our republican 
government is a mockery and the Christian Religion is 
an insult to God. Courts of Justice, mark the words 
"Courts of Justice," when seven men, women and chil- 
dren out of every ten of our people are slaves who are 
punished because they are seeking freedom of some 
kind, seeking relief in drunkenness, prostitution, in vice 
and crime and finding almshouses, jails, insane asylums 
and the suicide's unmarked grave. 

Let us review the process by which the civilized 
world has become enslaved while believing it enjoys 
the largest liberty, the most equal justice and the greatest 
happiness of any people in all history. 

To comprehend the power which the ownership of 
valuable property gives to some men and how other men 



BUT ONE PROBLEM TO BE SOLVED. 125 

are thereby enslaved we need to change many fomier 
beliefs concerning wealth and study it in the light of 
science and of evolution. 

The first and most important principle of evolution 
relating to wealth is that all our forms of property and 
commodities, all machinery, railways, telegraphs, tele- 
phones, food, clothing and luxuries are products of 
growth and are not products of labor in the true sense. 

If the reader will be patient it will not be difficult 
to demonstrate a most important truth, which on first 
sight seems to be splitting hairs, to be dividing a shadow 
from a substance and to be giving the shadow more 
weight than the substance. 

Nature creates all our forms, whether it be a blade 
of grass or a paper of pins, and the process in each case 
is subject to identical laws of growth. In the blade of 
grass we see merely the automatic machinery bring out 
its own product withotit personal attention from an in- 
telligent creating being. 

In the paper of pins we see a human being inter- 
vene, who somehow embodies a small part of personal 
creative intelligence that allows us to witness a crude 
process of rapid growth in a very crttde mechanism. 

The important truth to now consider is that nature 
gives her powers of creation as a bounty to man and 
does not compel him to pay, or work for her, in return. 
Mark this point well, that from the side of creation there 
is no wealth in the material world, that all manner of 
products of machinery and supplies are furnished as ab- 
solutely free as the sunshine and the air. 

To make this subject more clear the reader should 
be able to see the line dividing property from the value 
of property, to see the difference between the ownership 



126 DISTRIBUTION. 

of property and the control of a definite quantity of 
value. 

Men are not slaves because they own no property 
but because they cannot secure the small sums with which 
they may buy each day such access to the whole as they 
require. The man of greatest liberty, who is most to be 
envied, is not the owner of railroads, banks and palaces, 
but rather the man of broad learning, of common sense 
and a liberal mind who may earn enough money at con- 
genial employment, anywhere in the civilized world to 
give him a key to the treasuries of the world. A man, 
who when he yearns for a palace can find more comfort 
and luxury in a great hotel for a few days. A man who 
need not own a theater in order to enjoy a play, own 
thousands of acres of park to enjoy the beauties of 
nature and who is content to visit a national gallery and 
enjoy master works of art rather than hog the art 
treasures of the world into his own museum. 

A man who finds an infinite variety in his pleasant 
association with his fellow men and on whom the grand 
simplicity of natural beauty is never lost. 

We need not own the world in order to enjoy the 
greatest bounty, but we must be able to secure access to 
its every source and variety of pleasure. 

To secure this access we depend upon that vague 
and intangible something which is known to us as value. 

It is not material to this discussion how the reader 
may regard value provided his view enables him to grasp 
the cause and cure of modern Slavery. 

The solution of the entire problem rests upon the 
quantity of value and the means of its distribution. 

Te secure enough value each day and to be able to 
buy the advantages of civilization will enable each man 



BUT ONE PROBLEM TO BE SOLVED. 127 

to solve his own labor problem and will free him from 
slavery. 

If the reader has a false idea of value, if he fails 
to realize the limit in its quantity and to realize the im- 
portance of its distribution he must fail to understand 
the problems of our civilization. 

The common idea of value resulted from looking 
at the facts entirely from the side of the individual, from 
his present relations, without connecting the past or 
predicating the future. 

The individual realizes that he must have food and 
clothing and in order to work he must have access to 
land and machinery. 

He fihds the food and clothing and the land and 
machinery to be the property of other men and finds he 
is thereby thrown out of the world with no hold upon 
life except as he may bid for his living in competition 
with like outcasts. 

Value is thus erroneously regarded as a result, or 
as an effect of excluding men from the world; the 
property owmed by men is supposed to be valuable on its 
own account, and as science advances, as inventions de- 
velop this property of a country not only increases in 
quantity but also increases in value and therefore the 
power of the property class is said to grow greater and 
the dependence of labor is said to become more acute. 

If this view of value is conceded to be true then the 
socialist has the logical and necessary solution which is 
to dissolve the property class and to have no private 
property. 

But if value is considered in a broader sense, if we 
take the past history of development into our picture 
and seek for natural laws under social conditions we 
arrive at an opposite conclusion. 



128 mSTRIBUTION. 

Instead of considering value to he a quality of pro- 
perty upon which labor depends for existence zve shoidd 
consider value as a quality of labor upon zvhich property 
depends for its distribution. 

In such case value is limited by the number and 
efficiency of laborers instead of being fixed arbitrarily 
by the owners of property. 

The increase in wealth is not secured by an increase 
in quantit}^ of property but by development of industry 
where the daily distribution of value is determined by 
the daily earning power of labor. 

We can accumulate only as much reserve wealth 
as we may establish credits, and as we may establish 
banks and other institutions where these credits may 
accumulate. 

Fixed property is thus limited in its value in a to- 
tally different way from the common idea, and property 
cannot advance in price beyond a limit fixed by the cir- 
culation of money depending upon the capacity of labor, 
and upon the volume of credit, and the volume of credit 
is determined b}^ the circulation of money. 

The solution of our problem then differs radically 
from the Socialist when we adopt this view of value.. 

Instead of doing away with private property we 
look to a proper distribution of value wherein each work- 
man may acquire his share of property according to his 
ability and according to the service he gives to others 
and then the number of property owners will equal the 
number of good laborers. 

The capitalist has no power given him by his own- 
ership of propert}^ or machinery to enslave labor but on 
the contrary the dependence of property upon labor 
grows greater with every increase in wealth. 



BUT ONE PROBLEM TO BE SOLVED. 129 

The owner of machinery controls products which 
sell in the market to laborers, and the price at which the 
product sells gives profit to the men who control 
property. 

But this profit must be renew^ed daily and is subject 
to constant change while the power that holds labor 
down is the incessant power of master over slave. The 
control of the circulation or distribution of money gives 
power to capital and this power arises by securing a 
great and constant volume of money and credit outside 
the hands of laborers. 

This volume of money and credit which never re- 
turns to distribution is secured at first from profit, from 
the sale of commodities and this condition cannot be 
avoided if civilization and progress is to continue. 

But if secondary distribution returned this profit 
back to its source there would be no slavery nor inequal- 
ity of condition. And furthermore it must return to its 
source unless it can change from a credit payable on 
demand into a debt which labor can never redeem. It 
is only because of the existence of billions of irredeem- 
able debts upon labor that a volume of money and credit 
accumulates outside the labor market and thus holds the 
world of labor in subjection and slavery. 



IQ <iU l^yi 



